The National Political Committee of Korea has pushed back debate on the “second phase” of the crypto law until after local elections on June 3.
The cryptographic framework postponed if necessary
Korean newspaper Maeil Business Newspaper reported growing uncertainty in the crypto sector after the National Political Committee excluded the Digital Assets Framework Law from the 31st.st on the agenda for the month of March.
On that day, lawmakers sent five finance-related bills to the subcommittee: the Framework Law on Administrative Regulation, the Law on Credit Information Protection, the Law on Support for Microfinance, the Law on Insurance Businesses, and the Law on Capital Markets. No crypto-related bills were included, but the plenary session of the Political Affairs Committee received “the partial amendment to the law on the protection of users of virtual assets, etc.” » by Representative Kim Nam-geun. and forwarded it to the bill review subcommittee.
Lawmakers opted to shelve the second-phase bill during a sensitive election period rather than impose controversial provisions on banks and foreign exchange tycoons, which have become the “key landmines” of the legislative process. Speculation in Korean political coverage suggests that the presidential office and the Financial Services Commission (FSC) are not entirely in agreement on how far to push ownership caps and how to narrowly circumscribe the issuance of stablecoins, adding to the narrative of impasse.
The proposed crypto framework comes at a time of major importance, as the aforementioned political disagreements also happen to be the two key conflicts between major players in the Korean cryptocurrency and financial sector.
The fight against stablecoins
South Korea recently witnessed a tug-of-war between the Bank of Korea and the FSC over who will issue won-denominated stablecoins.
The BOK is pushing for a bank-led consortium model, in which commercial banks must own at least 51% of any won-denominated stablecoin issuer. Bitcoinist reported this in October last year.
The FSC, however, recognizes that stablecoins require strict collateralization, but opposes a strict 51% bank ownership rule, warning that it would block the technology platforms, fintechs and exchanges that actually build the products for users.
These rules for stablecoin issuers must be set under the Basic Law on Digital Assets, so that every month of delay leaves existing and potential KRW stablecoin issuers operating in a gray area or stranded on the sidelines. According to local newspaper Aju Economy, this is a real and worrying problem for the industry. They reported and industry insiders are lamenting:
We need the bill to be finalized quickly to determine the direction of our affairs, but currently we are keeping all possibilities open, which only increases the cost burden.
The fight against equity
The FSC has supported proposals to treat large crypto exchanges more like securities or ATS-style markets, where no “same person” can in principle own more than about 15-20%. After strong resistance, regulators and the ruling party united around a 20% cap for “major shareholders,” with a narrow exception that allows stakes of up to 34% for new entrants, mirroring the 33.3% veto line provided in Korea’s trade law. Bitcoinist covered the story early last month.
For existing giants like Upbit and Bithumb, this is an ex post facto rule. Founders and early backers already hold stakes well above 20%, so a hard cap would require them to sell a significant portion of their equity over a three-year transition period (six years for some smaller exchanges). This could potentially disrupt ongoing mergers and acquisitions and reshape local market control.
What this means for the market
South Korea appears ready to move from a one-off crackdown to a comprehensive crypto regime. The delay comes on top of Seoul’s recent moves to strengthen oversight with strategies such as AI surveillance, manipulation investigations and tax monitoring, and to ease some restrictions, such as easing earlier proposals for stock market participation and reviewing companies’ trading of cryptocurrencies.
In the short term, uncertainty in rules regarding KRW stablecoins and exchange ownership could keep Korean venues’ risk premiums high and make local listing or market-making plans more difficult to model. After the election, a bank-heavy stablecoin framework and stricter governance rules could favor well-capitalized incumbents and banks over smaller, high-beta platforms. This could reshape altcoin liquidity and listings.
Lawmakers watering down ownership caps or opening stablecoin issuance beyond banks would serve as a clear signal of risk appetite for KRW-denominated products and for global companies interested in Korean retail.
At the moment of writing, BTC trades for exactly $66k on the daily chart. Source: BTCUSDT on Tradingview.
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