South Korea’s PPP Lawmaker Calls for Bank-Led Won Stablecoin Rollout, with Fintech Expansion Later

As South Korea’s legislative efforts on a basic digital asset law remain stalled, a ruling party lawmaker has proposed a two-track strategy for introducing won-denominated stablecoins, with banks taking the lead initially to ensure stability, before opening the market to fintech firms for innovation and distribution.

Kim Sang-hoon’s Two-Track Approach

Kim Sang-hoon, chair of the People Power Party’s special committee on stock and digital asset value-up, told Edaily in an interview on Aug. 20 at the National Assembly Members’ Office Building in Yeouido that he supports a bank-centered issuance plan based on a “50%+1” rule. Under this model, banks would hold a majority stake in stablecoin issuance, ensuring a conservative and secure foundation.

However, Kim stressed that a two-track approach is necessary to balance innovation and stability. In the early stage, banks would issue the stablecoins, while fintech companies would be brought in later to handle distribution and drive technological and product innovation. This phased approach aims to prevent the kind of volatility seen in unbacked cryptocurrencies while still allowing the ecosystem to evolve.

Context: South Korea’s Digital Asset Legislation

South Korea has been working on a comprehensive digital asset framework, but the basic digital asset law has faced repeated delays in the National Assembly. The current regulatory landscape is fragmented, with the Financial Services Commission overseeing virtual asset service providers under the Specific Financial Information Act, while other aspects remain unregulated.

The delay has left market participants uncertain about the legal status of stablecoins, which are pegged to fiat currencies like the won. A bank-led rollout could provide a clear regulatory pathway, as banks are already subject to strict financial oversight, reducing the risk of money laundering and consumer harm.

Why This Matters

Stablecoins are increasingly seen as a bridge between traditional finance and digital assets. For South Korea, a developed economy with high smartphone penetration and a tech-savvy population, a well-regulated won stablecoin could enhance payment efficiency and cross-border transactions. It could also support the government’s push to become a global hub for digital finance.

But the choice between bank-led and fintech-led issuance is critical. Banks offer stability and regulatory compliance, but fintech firms are often more agile and innovative. Kim’s two-track proposal attempts to capture both benefits, but it also raises questions about market competition and whether fintechs will have a meaningful role if banks dominate the initial phase.

Reactions and Industry Outlook

Industry observers have noted that a bank-led approach may slow down the adoption of stablecoins, as banks are traditionally risk-averse. However, the “50%+1” rule ensures that banks retain control, which could be a selling point for regulators and the public.

Fintech companies, on the other hand, have expressed interest in participating in the stablecoin market, but they may have to wait until the regulatory framework matures. Some experts argue that a parallel system, where both banks and fintechs issue stablecoins under different regulatory requirements, might be more effective.

Conclusion

Kim Sang-hoon’s proposal highlights the delicate balance between innovation and stability in South Korea’s digital asset policy. While the basic digital asset law remains pending, his two-track strategy offers a pragmatic path forward. The coming months will reveal whether lawmakers can translate this vision into legislation, and whether the market will embrace a bank-led stablecoin ecosystem.

FAQs

Q1: What is the “50%+1” rule in the context of stablecoins?
The “50%+1” rule refers to a requirement that banks hold a majority stake (more than 50%) in the entity issuing a stablecoin. This ensures that banks retain control and oversight, thereby enhancing stability and regulatory compliance.

Q2: Why is South Korea delaying the basic digital asset law?
The delay is due to disagreements among lawmakers over key provisions, including how to regulate stablecoins, the role of the central bank, and investor protection measures. The complexity of the legislation and the need to align with international standards have also contributed to the postponement.

Q3: How could a won stablecoin benefit South Korean consumers?
A won stablecoin could offer faster and cheaper digital payments, especially for cross-border transactions. It could also provide a stable store of value in the crypto ecosystem, making it easier for ordinary consumers to participate in digital finance without worrying about price volatility.