As the global financial landscape shifts toward blockchain-based assets, South Korea is facing a critical juncture in its approach to stablecoins. Lawmakers and regulators are increasingly vocal about the need to institutionalize these digital currencies to prevent the erosion of national monetary control. According to Rep.
Min Byoung-dug of the Democratic Party of Korea, delays in legalizing stablecoins could lead to the "disappearance of monetary sovereignty," as foreign dollar-pegged tokens become entrenched in everyday transactions. This call to action, echoed in parliamentary discussions and industry forums, underscores the tension between innovation and oversight in one of Asia's most tech-savvy nations.
The Real-World Rise of USD Stablecoins
Stablecoins, particularly those backed by the US dollar like USDT (Tether) and USDC (Circle), are already deeply integrated into South Korea's economy. Small businesses are using them to pay salaries to foreign workers, who often prefer these assets for their stability and ease of cross-border transfer.
Larger firms are adopting them for international settlements, bypassing slower traditional banking channels.
This grassroots adoption highlights stablecoins' practicality: they enable faster, cheaper remittances and trade, reducing costs by up to 80% compared to conventional wire transfers in some cases.
Data from Chainalysis's 2025 Global Crypto Adoption Index shows South Korea ranking among the top 10 countries for stablecoin transaction volume, with over $50 billion in inflows tied to these assets in the past year alone.
This surge is driven by economic factors like inflation hedging and the country's large expatriate workforce, where stablecoins facilitate seamless payments without currency conversion fees.
Also read: South Korea’s Digital Pearl Harbor: A Timeline of Coincidence or Cover-Up?
Risks of Inaction: Dollarization and Loss of Control
Without domestic regulation, the dominance of USD stablecoins poses significant threats. As Min noted at the Global Business Forum in Seoul, "Stablecoins are no longer a question of whether we should do them or not... The only question left is how fast and how well we do them."
If unchecked, this could lead to a de facto dollarization of payments, making it "difficult to reverse" once standards are set. National won-backed stablecoins remain sidelined, lacking integration into the financial infrastructure, while foreign alternatives fill the void.
This scenario echoes broader concerns in emerging markets, where stablecoins could undermine local currencies. South Korea's Financial Services Commission (FSC) has already missed a government deadline for stablecoin guidelines, fueling debates over regulatory delays.
Additionally, the ongoing pilot of the digital won (a central bank digital currency, or CBDC) has sparked privacy fears, with critics arguing it could conflict with private stablecoin initiatives.
Advantages Driving Inevitable Adoption
Stablecoins' appeal lies in their efficiency: transactions settle in minutes at fractions of the cost of SWIFT-based payments, making them ideal for global commerce. In South Korea, where exports account for over 40% of GDP, businesses see them as a tool to enhance competitiveness.
Min advocates viewing stablecoins not just as a defense against dollar dominance but as a "growth strategy," proposing unique use cases like cultural content payments (e.g., K-pop royalties) or support for small businesses.
"If we make a stablecoin that’s especially useful for cultural payments or for small businesses, and turn global users into repeat customers, Korea can secure a meaningful share of the market," he said.
Globally, stablecoin market cap has surpassed $200 billion in 2025, with Asia leading adoption.
South Korea's strategy could leverage this, potentially integrating stablecoins with its advanced fintech ecosystem, including platforms like Kakao Pay.
Legislative Momentum: The Digital Asset Basic Act
To address these dynamics, South Korea's parliament is advancing the **Digital Asset Basic Act**, now in its second phase.
This legislation aims to define the legal status of digital assets, establish issuance principles, and extend beyond speculative trading to practical applications.
The Democratic Party has set a March 2025 deadline for crypto legislation, opposing bank-dominated rules and pushing for inclusive frameworks. As of September 2025, no dedicated stablecoin framework exists, but the act could enable won-backed tokens under FSC oversight.
This bill represents a balanced approach: fostering innovation while ensuring compliance with anti-money laundering standards and consumer protections. Stakeholders like the FSC and lawmakers emphasize collaboration with traditional finance to mitigate risks.
Looking Ahead: A Strategic Imperative
South Korea's push for stablecoin institutionalization reflects a proactive stance in a world where digital payments are reshaping economies. By developing won-backed alternatives with niche applications, the country aims to retain sovereignty, boost small businesses, and capitalize on cultural exports.
However, regulatory hurdles and privacy concerns from the CBDC pilot must be navigated carefully. As Min warns, inaction risks leaving vulnerable groups behind in a rapidly evolving financial system. With the Digital Asset Basic Act on the horizon, 2026 could mark South Korea's emergence as a stablecoin powerhouse, blending tradition with blockchain innovation.
Also read:
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Author: Slava Vasipenok
Founder and CEO of QUASA (quasa.io) - Daily insights on Web3, AI, Crypto, and Freelance. Stay updated on finance, technology trends, and creator tools - with sources and real value.
Innovative entrepreneur with over 20 years of experience in IT, fintech, and blockchain. Specializes in decentralized solutions for freelancing, helping to overcome the barriers of traditional finance, especially in developing regions.
This is not financial or investment advice. Always do your own research (DYOR).
