South Korea Faces Delayed Digital Finance Regulation

As major countries around the world are moving to regulate digital finance, voices are growing louder that South Korea's regulatory adjustments are also urgent. An image representing digital finance in the US, South Korea, and Japan. Source: ChatGPT

As major countries rush to regulate digital finance, South Korea's stablecoin and token securities institutionalization are also under scrutiny. In particular, the speed at which the US and Japan are advancing in this area, which will be a core pillar of digital finance in the future, is notable. In contrast, there are concerns that South Korea is lagging behind in regulatory adjustments. As the domestic digital asset industry and major financial sectors prepare for changes in digital finance, there is a pressing need to eliminate the uncertainties they are facing.

US Facing Federal-Level Regulation

According to a report on reserve assets released by Tether, the issuer of the world's largest stablecoin USDT, in July, the company's holdings of US Treasury bills amount to approximately $115 billion (about 153.56 trillion KRW). This represents an increase of about 9% compared to the same month last year, indicating that dollar-based stablecoins have become one of the major demand sources in the US Treasury bill market.

The US has managed stablecoin reserve assets under a state-level licensing and supervision system prior to federal regulation. For example, the New York State Department of Financial Services (NYDFS) announced guidelines for dollar stablecoins in June 2022, allowing issuers to hold US Treasury bills with a remaining maturity of three months or less as reserve assets. At the federal level, the GENIUS Act, a stablecoin regulation law, was enacted in July 2025. This law requires licensed stablecoin issuers to maintain a minimum reserve asset of 1:1 against their circulation and allows US Treasury bills with a remaining maturity or issuance maturity of 93 days or less. The law's effective date is set for January 18, 2027, or the earliest date after the final implementation regulations are announced by the relevant federal supervisory agency. Experts believe that the GENIUS Act will soon be implemented, subjecting dollar-based stablecoins to federal regulation.

Japan Expands STC Operational Scope

Japan has also expanded the operational scope of stablecoin reserve assets with the revised Payment Services Act, which will be implemented from June 2026. Accordingly, under certain conditions, trust-type stablecoins can operate up to 50% of their issuance in government bonds with a maturity of three months or less and time deposits. Previously, funds were primarily managed as demand deposits.

The Japanese industry is also accelerating its yen stablecoin business in line with these regulatory adjustments. On the 7th, SBI Holdings' SBI New Trust Bank and SBI VC Trade announced that they have begun to manage 1 billion yen (about 9.4 billion KRW) of the reserve assets of their yen stablecoin JPYSC in Japanese Treasury bills. The two companies stated that they would utilize stablecoins for remittances, payments, and tokenized asset transactions while securing the liquidity needed for redemption.

South Korea is promoting stablecoin regulation through the so-called second phase of virtual asset legislation. The Financial Services Commission emphasized the need for bank-centered issuance and market trust for stablecoins during discussions on the government's review plan in March. Yoo Young-jun, the head of the Digital Finance Policy Division at the Financial Services Commission, also stated at a public event in July that they would expedite the completion of stablecoin legislation after consultations with relevant agencies. However, as actual legislative action has not yet taken place, there are growing calls for prompt legislation similar to that of the US and Japan.

Mitigating Uncertainty in Token Securities in the US and Japan

In the token securities sector, companies in the US and Japan are expanding their businesses based on existing securities regulations. In the US, under the principle that the legal nature of securities does not change even when issued as tokens, businesses are developing token securities projects using existing systems. Additionally, the US Securities and Exchange Commission (SEC) has clarified the regulatory uncertainties by distinguishing between the method of tokenizing securities directly by issuers and the method of creating tokens linked to underlying securities by third parties.

As a result, the world's largest asset management firm, BlackRock, launched the tokenized fund BUIDL in March 2024 in collaboration with the US tokenization specialist Securitize. Furthermore, the US asset management firm Franklin Templeton has been operating a registered money market fund (MMF) utilizing public chains since 2021. This MMF is also available to individual investors.

In the US, infrastructure for listed stocks has also been improved. The SEC approved Nasdaq's tokenized securities trading rules in March. This tokenized securities trading has the same rights and stock identification numbers as existing stocks and is traded on the same order book.

Japan implemented the revised Financial Instruments and Exchange Act in May 2020 to regulate token securities. It applied disclosure and sales regulations to tokenized fund shares that could increase liquidity and allowed financial companies to develop their businesses. The comprehensive financial group Nomura in Japan conducted a public offering of token securities using real estate trust beneficiary rights, and the Osaka Digital Exchange (ODX) opened the token securities trading market START in December 2023.

"Need for Detailed Standards and Timelines"

South Korea is also moving to regulate token securities. On the 4th, the Financial Services Commission explained its policy direction to expand the scope of token securities beyond fractional investments to include funds, bonds, and unlisted stocks at a public-private joint token securities council. Accordingly, in line with the law's implementation in February 2027, it plans to promote the tokenization of private equity funds for institutional investors, general bonds, and unlisted stocks through a trust method in the first phase. In the second phase, the scope of token securities will be expanded to public securities. Finally, in the third phase, on-chain payments linked to stablecoins will be prepared. Tokenization of listed stocks will be conducted in conjunction with model verification and pilot projects centered on the Korea Exchange (KRX). Additionally, the tokenization of unlisted stocks will involve issuing profit securities as tokens after entrusting existing stocks, thereby sharing the burden of stock rights management and token management. The distributed ledger will involve participation from at least three independent institutions, ensuring that no single institution holds more than 50% of the verification stake.

However, since the timing for allowing the tokenization of public securities, which have a large market size, remains uncertain, there are calls for swift reviews in line with global trends. Furthermore, according to the Korea Securities Depository on the 4th, it has been stipulated that token securities should only be issued and circulated on a single distributed ledger, prohibiting transfers to other distributed ledgers after issuance, raising concerns that this could limit the cross-border nature of blockchain technology, which is one of its characteristics.

Song Chang-seok, Director of Blob Web3, pointed out that "to complete the token securities market, it is necessary to combine it with the stablecoin payment system," emphasizing that while investor protection standards such as reserve assets and redemption obligations should be clearly defined, it is also important to enhance the predictability of detailed standards and implementation timelines to allow companies to prepare their businesses.

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