Regulatory Battle Between Traditional Finance and Blockchain Innovators

South Korea is rapidly advancing toward establishing a legal framework for stablecoins, positioning them as a key component of the “Phase 2” Digital Asset Law. The central debate now centers on who will control stablecoin issuance and operation.

Traditional financial institutions advocate for strict oversight to maintain financial stability, while the blockchain industry emphasizes innovation and efficiency—particularly in cross-border settlements, as shown in recent Korea-Indonesia trade pilots.

Lawmakers aim to finalize the “Virtual Asset Basic Act” this month, which will likely include specific licensing criteria for stablecoin issuers. This domestic regulatory struggle will determine whether Korea’s stablecoin regime promotes financial innovation or reinforces the dominance of existing financial institutions.

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