South Korea Moves Forward with Stablecoin Regulation Amid Tax Repeal Debate

The South Korean government is moving forward with plans to regulate stablecoins and digital assets. The Financial Services Commission (FSC) will draft a consolidated Digital Asset Basic Act, which includes rules for stablecoin issuance and circulation. The proposed bill would also cover exchange entry requirements, disclosures, internal controls, and system-resilience standards.

The FSC aims to provide a central framework for negotiations on the proposal, which has been delayed due to disagreements among lawmakers. The plan is to introduce a consolidated bill, but no timeline has been set. Key disputes remain over whether won-denominated stablecoin issuers should be majority bank-owned and whether ownership limits should apply to major crypto exchanges.

Meanwhile, the opposition party has introduced a bill to repeal South Korea's planned cryptocurrency income tax. The tax, set to take effect on January 1, 2027, would impose a 20% tax plus a 2% local income tax on income from transferring or lending digital assets exceeding 2.5 million won (about $1,700) annually.