South Korea to Draft Stablecoin Law as Crypto Tax Faces Repeal

South Korea’s Financial Services Commission plans to work with the ruling Democratic Party to draft a consolidated Digital Asset Basic Act that would set rules for stablecoins and digital-asset businesses. The FSC notified the National Assembly ahead of a policy briefing that the government-backed bill would cover stablecoin issuance and circulation, licensing and entry requirements for exchanges, disclosure rules, internal controls and system-resilience standards.

The consolidated proposal is intended to provide a single framework for Parliament, where about 10 separate digital asset and stablecoin bills are currently pending. Officials have not set a date or decided the exact process for introducing the consolidated bill.

Lawmakers remain divided on several key issues that have delayed the next phase of crypto regulation. Central disputes include whether issuers of won-denominated stablecoins should be majority-owned by banks and whether ownership caps should apply to major cryptocurrency exchanges.

Separately, the National Assembly’s Finance and Economic Planning Committee prepared to table an opposition bill to abolish the crypto income tax before it takes effect on Jan. 1, 2027. The amendment to the Income Tax Act, introduced on March 19 by People Power Party lawmaker Song Eon-seok, would remove the provision taxing income from transferring or lending digital assets. Once tabled, the measure is expected to be referred to the committee’s tax subcommittee for detailed review.

A public petition backed by more than 50,000 people seeking repeal is also slated for consideration by the petitions subcommittee. Neither the tax subcommittee nor the petitions subcommittee has been fully formed, and no review dates have been set.

Under current tax rules, from Jan. 1, 2027 income from transferring or lending digital assets that exceeds 2.5 million won (about $1,700) per year will be taxed at 20 percent, plus a 2 percent local income tax. On May 7 the Finance Ministry confirmed the tax will proceed after previous delays. The government and the Democratic Party support implementing the tax, while opposition lawmakers describe it as unfair because most ordinary stock investors remain exempt from similar levies.

Officials and lawmakers have said resolving the outstanding disagreements will be necessary to finalize the consolidated legislation. Supporters of stronger entry rules for stablecoin issuers argue that bank involvement could enhance financial stability and consumer protection. Opponents have warned that strict bank ownership requirements could concentrate control of digital payments in the banking sector. Debate over exchange ownership limits focuses on preventing monopolies and allowing domestic firms to scale and compete internationally.

The proposed Digital Asset Basic Act would form part of the second phase of South Korea’s crypto legislation, aiming to clarify market and infrastructure rules while taxation matters move through separate committee channels.