FSC Rejects Bank of Korea’s Stablecoin Emergency Powers

South Korea’s Financial Services Commission (FSC) has rejected the Bank of Korea’s proposal to obtain emergency intervention authority over KRW-denominated stablecoins, creating a major split in Korea’s stablecoin regulation as the government moves toward Phase 2 of its Digital Asset Basic Act. The FSC emphasized that granting unilateral emergency powers to the central bank would provide “limited practical benefit,” pushing back against long-standing concerns raised by the Bank of Korea.

This dispute highlights the deeper policy question now shaping Korea’s stablecoin future: Should stablecoins be governed primarily as central bank–monitored payment instruments, or as digital financial products regulated under a market-driven licensing regime? As lawmakers increasingly support allowing qualified non-bank issuers—including fintech, big tech, and blockchain firms—to issue KRW stablecoins, the Bank of Korea continues to warn of risks such as de-pegging events, digital bank runs, and weakened control over capital flows.

With Korea preparing to introduce a full stablecoin licensing system within weeks, the regulatory direction selected will determine reserve requirements, redemption rules, supervisory authority, and the scope of participation by non-bank issuers. As major jurisdictions such as the EU, Singapore, and Hong Kong already advance comprehensive stablecoin oversight, Korea’s internal alignment will determine whether its regulatory model fosters financial innovation or defaults to traditional central-bank conservatism.

Related reading: Korea’s Digital Asset Basic Act Delayed: How Stablecoin and STO Tracks Are Moving Separately — Latest update on how the stablecoin issuer eligibility dispute is being resolved.