South Korea is reportedly preparing to introduce a regulatory framework for a won-backed stablecoin, with its financial regulator set to introduce a government bill in October.

On Monday, South Korean news portal MoneyToday reported that the Financial Services Commission (FSC) will unveil the bill as part of a second phase of the nation’s Virtual Asset User Protection Act.

Democratic Party of Korea (DPK) Representative Park Min-kyu said during a policy debate that he received a briefing from the FSC on the policy direction on stablecoins. “The government bill is expected to be submitted to the National Assembly around October,” Park said. 

The bill is expected to outline requirements for issuance, collateral management and internal control systems for stablecoins. The FSC has been working on the framework since 2023 through its virtual asset committee, aiming to set clearer rules for crypto service providers in the country. 

Reducing reliance on dollar-pegged stablecoins

With the United States ramping up its efforts on stablecoin legislation, South Korea is playing catch-up. 

Money Today said that institutionalizing won-pegged stablecoins had gained traction since President Lee Jae-myung pledged it during his campaign.

Several lawmakers have since submitted related proposals, including the Digital Asset Basic Act from Representative Min Byung-deok of the Democratic Party, the Act on the Issuance and Circulation of Value-Stable Digital Assets from Representative Ahn Do-gul of the Planning and Finance Committee and the Act on Payment Innovation Using Value-Pegged Digital Assets from Representative Kim Eun-hye of the People Power Party.

The report also said that local industry stakeholders have cited an urgent need to introduce a won-pegged stablecoin to reduce reliance on dollar-based stablecoin tokens. 

In June, major South Korean banks teamed up to work on a won-pegged stablecoin to protect the currency against growing dollar dominance. The banks said the forthcoming token was set to materialize in late 2025 or early 2026. 

Real-world asset (RWA) tokenization tracker RWA.xyz shows that as of Sunday, the total market value for stablecoins was $266.7 billion. The data shows that dollar-pegged stablecoins continue to dominate 99.8% of the market with $266.3 billion. 

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South Korea clamps down on tax evaders

In addition to clarifying stablecoin rules, South Korea has been clamping down on citizens using crypto to avoid paying taxes. 

On Monday, tax officials in Jeju City, the capital of Jeju Province, began freezing and seizing digital assets of users suspected of dodging tax requirements using crypto.

Authorities started investigating nearly 3,000 individuals in arrears for a total of about $14.2 million to confirm if they had holdings that could be seized to settle their tax balances.  

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