South Korea is amending the Foreign Exchange Transactions Act to classify stablecoins as legal payment instruments. This change aligns dollar-pegged tokens with government-issued banknotes under the existing regulatory framework to address risks related to cross-border transactions, money laundering, and tax evasion.
The legislative process began on October 28, 2025, with a proposal from Representative Park Sung-hoon. On May 7, 2026, an amendment was passed requiring virtual asset transfer businesses to register with the Ministry of Economy and Finance. Non-compliance carries penalties of up to three years in prison.
The Bank of Korea has advocated for stricter controls on stablecoin outflows to mitigate foreign exchange risks. Authorities aim to finalize these regulatory measures by the end of 2026. Consultations regarding the separate Digital Asset Basic Act are in their final stages, with a National Assembly review scheduled for November 2026.
Currently, South Korea lacks a specific licensing regime for stablecoin issuers. Ongoing policy discussions focus on potential partnerships between banks and fintech firms, specifically addressing issuance rights and capital requirements. These changes will increase oversight of intermediaries and raise compliance costs for smaller operators.
