The Night of the 'Digital Won's' Fate: 5 Variables the March 5 Party-Government Showdown Throws at Korea's Stablecoin Market
The unified proposal for the Digital Asset Basic Act (Phase 2 legislation) is set to be finalized at a closed-door party-government council on March 5. Key issues — including the bank 51% rule for stablecoins and the 15–20% cap on crypto exchange equity stakes — have become a watershed moment that will shape the landscape of Korea's virtual asset industry.
Right now, at this very moment, the future of Korea's virtual asset market is being decided behind closed doors in Yeouido.
TL;DR
- On Thursday, March 5, the ruling party (Democratic Party of Korea) and the Financial Services Commission are set to finalize the unified proposal for the Digital Asset Basic Act (Phase 2 legislation) at a closed-door party-government council
- Key issues: Bank 51% Rule for Stablecoins + 15–20% cap on crypto exchange equity stakes
- KOSPI's record-breaking -12.06% single-day crash has raised the possibility of a schedule change
- Industry and academia push back: "The 51% rule stifles innovation"; the Bank of Korea strongly supports it for financial stability
- If the bill passes, Korea could become the first country to institutionalize a KRW-pegged stablecoin ahead of the US and EU
The Facts: What Is Happening
On March 4, the Financial Services Commission convened the '1st Virtual Asset Committee of 2026', chaired by Vice Chairman Kwon Dae-young, to conduct a final review of the government's proposal for the Digital Asset Basic Act. Attending institutions included the Ministry of Science and ICT, the Ministry of Economy and Finance, the Ministry of Justice, the Financial Supervisory Service, and private committee members.
The core of the government's proposal discussed at this meeting has two pillars:
- Bank 51% Rule: The entity issuing a KRW-pegged stablecoin must be a consortium in which commercial banks hold more than 50% + 1 share.
- Exchange Equity Cap: Virtual asset exchanges (Upbit, Bithumb, etc.) may hold no more than 15–20% of a stablecoin issuer's equity.
A source told Edaily that "both provisions are expected to be included in the bill." Once the unified party-government proposal is confirmed at the March 5 closed-door council, it is expected to proceed directly to a National Assembly submission.
Meanwhile, JoongAng Ilbo reported that a compromise plan — a 20% cap with a 34% exception and a 3-year grace period — is the most likely outcome. A 'tiered grace period' based on market share is also on the table.
Why This Is an Issue Now
- US GENIUS Act (stablecoin regulation): Passed the House in July 2025 → intensifying Korea's legislative competition
- KOSPI's record-breaking -12.06% crash (3/4): Strengthened the case for prioritizing financial stability, boosting momentum for the 51% rule
- Daum Real-Time Trends Revival (3/4): Surge in search volume for digital asset-related topics
- KRW/USD breaking ₩1,500 and the prolonged Iran war: Amid a foreign exchange and financial crisis, regulating KRW stablecoins has emerged as an urgent policy issue
- 90 days before the June 3 local elections: Political context in which the ruling party is accelerating delivery on its 'digital financial innovation' pledges
Stakeholders: Who Is Involved
| Stakeholder | Position |
|---|---|
| Bank of Korea | Strongly supports the 51% rule. "Banks must lead for financial stability." |
| Financial Services Commission | Has shifted toward accepting the 51% rule. Also backing the exchange equity cap. |
| Democratic Party of Korea | Led by Rep. Kang Jun-hyeon. Aims to finalize the unified party-government proposal on March 5. |
| Upbit, Bithumb, etc. | Oppose the equity cap. "Forced dilution of major shareholder stakes." |
| Fintech Startups | Against the 51% rule, arguing it entrenches a bank monopoly structure. |
| Academia & Experts | "The 51% rule does not necessarily guarantee stability" (Rep. Min Byeong-deok et al.) |
5 Key Variables
1️⃣ If the 51% Rule Passes: Bank Monopoly vs. Institutional Stability
If banks hold the majority stake, risk management will be strengthened, but the launch of innovative services could be delayed. The industry fears that "Korean stablecoins will fall behind Hong Kong and Singapore."
2️⃣ The Exchange Equity Cap: Upbit and Bithumb's Calculus
If crypto exchanges are capped at 15–20% equity in issuers, Upbit (Dunamu) and Bithumb's participation in the stablecoin business will be restricted. Whether a 3-year grace period clause is included is the key variable.
3️⃣ KOSPI Crash & Iran War: Risk of Legislative Delay
With KOSPI plunging -12.06% on March 4, calls emerged for the FSC to focus on market stabilization. If the party-government consultation is delayed, a National Assembly submission could be pushed back to April or later.
4️⃣ KRW Stablecoin and CBDC Coexistence
The Bank of Korea is already running CBDC (digital KRW) experiments. If a private KRW stablecoin is permitted, defining the division of roles with CBDC will emerge as a new policy challenge.
5️⃣ Global Competition: Korea Could Be Faster Than the US and Hong Kong
With the US GENIUS Act passing Congress and Hong Kong implementing a stablecoin licensing regime, if Korea submits a bill within March, it could become the fastest G20 nation to institutionalize a KRW-pegged stablecoin.
Context & Background: The Journey to Phase 2 Legislation
- July 2024: Virtual Asset User Protection Act (Phase 1) enacted → regulation of unfair trading and deposit protection
- Second half of 2025: Both ruling and opposition parties adopt the 'Digital Asset Basic Act' as a campaign pledge for the June 3 snap presidential election
- October 2025: Rep. Choi Bo-yoon et al. submit the Digital Asset Development Basic Bill
- February 2026: National Assembly Digital Asset TF in its 5th month. A 2-hour 30-minute advisory committee meeting on February 24 ended without a conclusion
- March 4, 2026: Government's 1st Virtual Asset Committee → confirmed policy to include 51% rule and equity cap
- March 5, 2026: Party-government closed-door council → final showdown on unified proposal ← We are here
Outlook: Post-Bill Submission Scenarios
- Optimistic scenario: Unified party-government bill submitted within March → National Assembly plenary vote within H1 2026 → First KRW stablecoin issued in H2 2026
- Middle scenario: Compromise (34% exception + 3-year grace period) reflected, submission in April
- Pessimistic scenario: Discussion halted due to prolonged Iran war and financial instability, resumed after the June 3 local elections
Checklist: Things to Watch
Reference Links
- Government to push through stablecoin bill with '51% rule & equity cap'… controversy inevitable (Edaily, 2026.03.04)
- Party-government to finalize unified Digital Asset Basic Act proposal on the 5th (JoongAng Ilbo/Daum, 2026.03.04)
- Ruling party to conclude stablecoin bill on the 5th… unified party-government submission imminent (Edaily Market In, 2026.03.04)
- KOSPI crash prompts talk of postponing tomorrow's party-government meeting… stablecoin bill in trouble (Nate News, 2026.03.04)
- South Korea's Pivotal Regulatory Showdown Begins March 5 (MEXC, 2026.03.04)
Image Credits
- Bitcoin logo: Wikimedia Commons, Public Domain