Korea Faces Regulatory Test as Digital Money Moves Toward Mainstream

South Korea needs to close legal and regulatory gaps before stablecoins and tokenized securities can move into mainstream finance, experts told a business forum in Seoul, highlighting questions over payment validity, wallet identification and cross-border transactions.

Speaking at Herald Media Group’s Global Business Forum on Wednesday, Seoul National University finance professor Lee Jong-sub described blockchain as an “internet of money” that could allow value to move as easily as email. He said stablecoins seek to reduce the volatility associated with cryptocurrencies such as Bitcoin by backing tokens with assets including dollar deposits or U.S. Treasurys. Bonds and stocks can also be represented on blockchain networks through tokenization.

Korea’s policy stance has shifted markedly since 2017, when regulators focused on suppressing cryptocurrency activity, according to Kim Ik-hyun, a partner at law firm Yulchon. Revised securities legislation passed by the National Assembly in January is due to permit token securities from early next year. Regulators also announced a three-stage roadmap in September that ultimately envisions blockchain-based settlement using stablecoins.

Kim said the next step is a digital asset law that recognizes stablecoin payments as legally valid. He also argued that Korea needs a domestically issued, won-pegged stablecoin backed by safe assets and redeemable for won. The aim, he said, is not simply to challenge dollar-backed tokens overseas, but to provide a basic settlement instrument if Korean financial markets increasingly operate on blockchain networks.

Major practical obstacles remain. Lee said decentralized wallets can be created without a bank-style identity check, making it difficult to establish who owns a wallet or whether funds moving through it are legitimate. Kim said stablecoin use in cross-border business is still years away because Korea’s foreign exchange framework has not caught up with the technology. Registered crypto businesses only began reporting overseas coin transfers in June.

Lee suggested a two-track structure to limit the risk that wider use of dollar stablecoins could erode the won’s role: tokenized bank deposits for domestic users and a won-backed stablecoin that foreigners could use to buy Korean goods and services. Kim warned businesses that tokenized finance could become increasingly relevant as financial companies develop blockchain-based funding services for manufacturers and retailers.

The discussion places regulation at the center of Korea’s next phase of digital-finance development. The technology is moving closer to established markets, but clear rules on settlement, identity and foreign exchange will determine whether it can be used safely at scale.