South Korea's ruling Democratic Party established a Digital Asset Task Force on 25 September 2025 with the aim of passing comprehensive stablecoin and cryptocurrency legislation by year-end, after Korean crypto exchanges transferred $40.6 billion worth of digital assets abroad in Q1 2025, with half flowing through stablecoins such as USDT and USDC, raising alarms among policymakers over the nation's monetary sovereignty.
Han Jung-ae, chair of the Democratic Party's policy committee, stated at the launch ceremony in the National Assembly that the need for legislation covering the issuance, distribution, and regulation of virtual assets and stablecoins is constantly being raised by the market. Representative Lee Jung-moon, head of the task force, emphasised that the world is in a frenzy of blockchain and digital assets, and the Democratic Party intends to lead rather than follow, including by establishing a won-based stablecoin policy to counter U.S. dollar-dominated digital asset frameworks. However, according to BeInCrypto, President Lee Jae-myung's original pledge to reform the financial authorities has collapsed: the government, ruling party, and presidential office decided to reconsider the planned reform from scratch, maintaining the existing structure of the Financial Services Commission (FSC) and Financial Supervisory Service (FSS). This reversal has created uncertainty over which agency will regulate crypto, and there are concerns that the discussion on legalising a Korean won-backed stablecoin may be sidelined, even as more than 10 banks, including the five largest commercial banks, have formed a council to collaborate on a joint stablecoin through a potential joint venture. Peter Chung, head of research at Presto Labs, told Decrypt that custody rules, disclosure requirements, and insurance mechanisms are the top consumer protection priorities, and anticipates that the government's pro-growth stance will favour innovation sandboxes over heavy prudential regulation. The task force will coordinate with the FSC, FSS, and Bank of Korea, while the rival People Power Party filed competing stablecoin legislation in July.
South Korea's crypto regulatory efforts continue despite the collapse of the financial authority reform, with the ruling party's task force seeking bipartisan agreement during the year-end legislative session as the country confronts the dual challenge of $40.6 billion in capital outflows and intensifying global stablecoin competition.
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