EXPLAINER What is '51% rule'? Bank-led stablecoin plan stalls Korea's digital asset legislation

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The question of who should issue a won-denominated stablecoin has emerged as a key sticking point in deliberations over the tentatively titled Digital Asset Basic Act, government and ruling party officials said Tuesday.

The Bank of Korea (BOK) argues that stablecoin issuance should be restricted to consortiums led by commercial banks holding a minimum 51 percent stake, stressing the need to safeguard financial stability. The Financial Services Commission (FSC), by contrast, says opening issuance to nonbank entities, including fintech and blockchain companies, is necessary to spur innovation and invigorate the digital asset industry.

The ruling Democratic Party of Korea (DPK) has signaled opposition to the central bank’s so-called 51 percent model, arguing that a bank-centric framework would limit innovation and weaken potential network effects. Rep. Ahn Do-geol said most of the 20 external advisers serving on the party’s digital asset task force also raised concerns about the proposed governance structure.

The governing party had originally urged the FSC, the country’s top financial regulator, to submit a government-backed bill by the end of this year so the legislation could be introduced within the same timeframe. However, ongoing disagreements between the central bank and the financial regulator over who should be allowed to issue stablecoins have delayed the submission.

With the government bill now likely to be pushed into next year, the party has voiced concerns over legislative delays and is urging the government to present the final proposal by early next year at the latest.

Rep. Ahn Do-geol of the ruling Democratic Party of Korea delivers opening remarks at a policy forum on the institutionalization of stablecoins at the Korea Financial Investment Association building in Seoul, July 23. Yonhap

At Monday’s meeting of the DPK’s task force, the issue of stablecoin issuers again dominated the discussions.

“A majority of participating experts voiced concerns about the BOK’s proposal, with many questioning whether such a framework could deliver innovation or generate strong network effects,” Ahn told reporters after the meeting. “It is also hard to find global legislative precedents in which institutions from a specific sector are required to hold a 51 percent stake.”

He added, “Concerns raised by the central bank regarding financial stability could be mitigated through a range of regulatory and technological measures, a view broadly shared among advisers."

Ahn further argued that the issuance framework should be designed to promote openness and competition, allowing institutions with the capacity to cultivate trading activity and generate demand for a won-backed stablecoin to play an active role.

“Issuers should be selected based on their ability to advance innovation rather than their institutional classification,” he said.

Foreign-issued stablecoins were also a major topic of discussion at the task force meeting.

According to an earlier draft of the government proposal prepared by the FSC, overseas-issued stablecoins would be permitted to circulate in Korea only if the issuer is properly licensed in its home country and has established a subsidiary or branch in Korea. This would mean that Circle, the issuer of USDC, the world’s second-largest stablecoin, would need a local presence for the token to be distributed domestically.

The approach is broadly aligned with international regulatory practices, as jurisdictions such as Hong Kong and Japan require foreign stablecoin issuers to establish local entities before operating in their markets.

Still, some participants cautioned that the requirement could weaken Korea’s market competitiveness, calling for detailed rules to be clarified in the bill itself and in subsequent enforcement ordinances.

Ahn said the party expects the government’s final proposal reflecting these discussions to be submitted in early January, with plans to introduce the bill to the National Assembly later that month.