Ruling Party and Government Agree on '51% Bank Stake Consortium' as Stablecoin Issuer

Ruling Party Demands Government Submit Bill by December 10
Target Set for Passing Digital Asset Act in January

On December 1, the Democratic Party of Korea and the government entered final coordination for the enactment of the second-phase digital asset bill, which includes a regulatory framework for stablecoins. The main point of contention-the issuer of stablecoins-has been settled in the form of a consortium, with consensus that banks will hold 51% of the consortium's shares. However, as the government has yet to present a detailed proposal, the ruling party has set a submission deadline for December 10.

The Democratic Party, the Financial Services Commission, and other financial authorities held a closed party-government consultative meeting at the National Assembly Members' Office Building in the morning to discuss the draft Digital Asset Basic Act, proposed amendments to the Capital Markets Act, and the Electronic Financial Transactions Act.

Since the existing Virtual Asset User Protection Act (Phase 1) only regulated virtual asset service providers, it was deemed urgent to establish a regulatory framework for won-based stablecoins to build a robust virtual asset ecosystem. This was the reason for convening the consultative meeting. With major countries such as the United States, European Union, and Japan already establishing stablecoin systems, and with dollar-based coins like Tether (USDT) dominating the market, there is a pressing need for Korea to respond swiftly.

Until now, differences in views between financial authorities, the ruling party, and the Ministry of Economy and Finance regarding the issuance structure have caused repeated deadlock in institutionalizing stablecoins. The ruling party and the Ministry of Economy and Finance believe an open structure is necessary, considering domestic industry competitiveness and innovation. In contrast, the Financial Services Commission and the Bank of Korea have raised concerns about stablecoin depegging (collapse of 1:1 value), large-scale redemptions, and payment settlement stability.

However, at the consultative meeting, a compromise was reached to balance the Bank of Korea's demand for monetary policy stability and the Financial Services Commission's emphasis on private sector innovation. Immediately after the meeting, Kang Junhyun, the Democratic Party's secretary of the National Assembly's Political Affairs Committee, stated, "The main point of contention-the issuer of stablecoins-has been settled as a 'consortium structure' after coordinating the positions of the Bank of Korea, the Financial Services Commission, and the banking sector. There is consensus that banks will hold 51% of the consortium's shares."

If the government proposal is not submitted to the National Assembly, the review will proceed with bills proposed by lawmakers. Currently, Democratic Party lawmakers Min Byungdeok, Ahn Dogeol, and Kim Hyunjung, as well as People Power Party lawmaker Kim Eunhye, have submitted related bills, and Democratic Party floor leader Kim Byungki is also preparing legislation.

Kang emphasized, "We strongly demanded that the government submit a draft bill containing the main framework by December 10. If the government proposal is not submitted by this deadline, we will push forward with legislation initiated by lawmakers through the Political Affairs Committee."

The target for passing the Digital Asset Basic Act is set for January next year. Kang explained, "We will quickly share and propose the finalized bill, and then go through a public debate process with the Digital Asset Task Force within the Democratic Party. Even if discussions are possible within this year, the actual passage of the bill will likely happen in January next year. I am not sure what the opposition (People Power Party) thinks, but the discussion process seems likely to take some time."

The detailed items discussed in the amendment to the Capital Markets Act included issues such as corporate mergers and the application of fair value, physical spin-offs and priority allocation of new shares to general shareholders through public offerings, mandatory tender offers, and the obligation to return short-term trading profits. These are measures promoted by the Democratic Party to protect minority shareholders and investors. Kang commented, "Many related bills have been submitted, and close communication with the opposition is necessary. It was agreed that the government needs to persuade the People Power Party."

Regarding the amendment to the Electronic Financial Transactions Act, which aims to strengthen information security at financial institutions, it was decided to pursue legislative discussions in the Political Affairs Committee's review of bills. Kang stated, "There are bills to introduce administrative fines and enforcement penalties, strengthening post-violation sanctions. There seems to be no disagreement with the opposition on these points."

Additionally, the intention to promote the establishment of the Inclusive Finance Stability Fund and to supplement the New Leap Fund (bad bank) was reaffirmed. Kang explained, "A bill to establish the Inclusive Finance Stability Fund has been submitted. This is part of the inclusive finance initiative mentioned by the President. We will discuss with the opposition to pass it as soon as possible. Regarding the New Leap Fund, there is a need for supplementation, so a bill related to credit information sharing has been submitted. We plan to legislate and promote it to ensure the bad bank is implemented properly."

This content was produced with the assistance of AI translation services.