South Korean lawmakers and financial regulators are collaborating to implement a new Digital Asset Basic Act by January 2026, reshaping the country’s DeFi landscape through a bank-led stablecoin consortium.
The regulatory shift aims to strengthen consumer protection and increase bank involvement but may challenge fintech innovation and affect stablecoin and Ethereum-based DeFi protocols in Korea.
South Korea plans a bank-led stablecoin model to redefine DeFi, emphasizing institutional control and compliance.
South Korea is finalizing a major regulatory framework to reshape its DeFi landscape. The Digital Asset Basic Act mandates a bank-led stablecoin consortium, requiring at least 51% bank ownership for stablecoin issuance. This regulation involves key players like Representative Kang Jun-hyun, the Financial Services Commission (FSC), and the Bank of Korea (BOK), coordinating to draft and finalize this bill, targeting January 2026 for legislation. As Kang Jun-hyun remarked, “The government must submit proposed legislation by December 10, 2025, or lawmakers will advance their own draft.”
Bank-Led Model to Dominate Korean DeFi by 2026
The new framework consolidates control among traditional banks, potentially increasing liquidity. However, it raises entry barriers for fintech, impacting innovation. Nifty0x noted on Twitter: “Strengthens consumer protection but risks sidelining crypto startups.”
Regulation will impact won-pegged stablecoins and major DeFi protocols like Ethereum, focusing on compliance and anti-money laundering standards. The enforcement includes penalties for noncompliance, significantly influencing South Korea’s crypto market.
Regulatory Approach Parallels U.S. and Japan
South Korea’s past crypto regulations primarily focused on virtual asset providers leaving regulatory gaps in DeFi. These efforts align with global trends in stronger stablecoin oversight, as seen in the U.S. and Japan. Experts note that while the regulatory model enhances stability and consumer protections, it may limit startups. The shift towards institutional control could centralize DeFi activity, impacting innovation as seen in other economies.
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