South Korea to Introduce Stablecoin Rules and Approve BTC ETFs

TLDR

• South Korea will introduce stablecoin regulations in 2024, requiring issuer licensing, full reserves, and redemption rights.
• The Financial Services Commission and Finance Ministry will oversee new rules on cross-border stablecoin transactions.
• Digital asset spot ETFs, including Bitcoin, will be approved this year, reversing previous restrictions.
• Authorities will amend laws to support blockchain-based treasury transactions using deposit tokens by 2030.
• Government agencies will adopt digital wallets to process expenses and settlements using blockchain-linked deposit tokens.

South Korea has announced major developments in its digital asset framework as part of its 2026 Economic Growth Strategy. The plan outlines new regulations for stablecoins and cross-border transactions, paving the way for Bitcoin spot ETFs.

South Korea to Regulate Stablecoins and Cross-Border Transactions

The Financial Services Commission will begin drafting a second-stage digital asset bill this year, with a focus on regulating stablecoins. The proposed law will introduce requirements for issuer licensing, capital reserves, and asset management. Issuers will need to maintain 100% reserves equal to the amount of issued stablecoins, ensuring full backing of the digital assets in circulation.

The bill will also guarantee that stablecoin holders have legal rights to redemption, ensuring better protection in the event of a collapse or liquidity crisis.  Alongside domestic regulation, authorities will implement a framework for managing cross-border transactions involving stablecoins. The Financial Services Commission and the Ministry of Strategy and Finance will jointly oversee this area to prevent illicit use and ensure the safe international flow of funds.

The government will establish guidelines on how foreign-issued stablecoins can operate in South Korea’s financial system. Monitoring mechanisms and capital control rules are also expected to be included under this system. These rules will help align Korea’s digital asset policy with global standards on stablecoin usage and transfers.

Spot ETFs for Digital Assets to Be Allowed in the Domestic Market

The government has confirmed plans to allow digital asset spot ETFs for the first time, beginning with Bitcoin. This move follows growing international acceptance of Bitcoin ETFs, including in the United States and Hong Kong. Currently, digital assets like Bitcoin are not recognised as eligible underlying assets for ETFs under Korean regulations.

The new policy will revise this restriction, opening the way for listing and trading of spot ETFs tied to cryptocurrencies. Regulatory bodies are expected to publish operational guidelines and eligibility standards later this year. Authorities believe the introduction of digital asset ETFs will provide investors with safer, regulated access to cryptocurrency markets.

Spot ETFs differ from futures-based products by directly tracking the market price of assets like Bitcoin, offering more transparent exposure. However, all products will be subject to market rules and risk disclosures under the capital markets law. The move is also expected to increase participation by institutional investors. Local financial institutions are reportedly preparing ETF product proposals in anticipation of the policy change.

Deposit Tokens and Blockchain-Based Treasury Transactions

In a separate initiative, the government plans to expand the use of deposit tokens in public finance by 2030. These tokens will represent national treasury funds held in commercial bank accounts, operating on blockchain infrastructure. The goal is to transition at least 25% of treasury transactions to blockchain-based digital payments within four years. Authorities stated that this will enhance the efficiency of government fund management and provide real-time settlement capabilities.

The Ministry of Economy and Finance and the Bank of Korea will oversee the program. To support this transition, legal revisions will be made to the Bank of Korea Act and the National Treasury Management Act. The government will also review outcomes from pilot projects conducted in 2023 and 2024 before scaling up deployment.

As part of the plan, public institutions and agencies will receive digital wallets to process payments and settlements using deposit tokens. These wallets will be integrated with existing accounting systems for routine transactions, including operating expenses. The government aims to finalize the legal and technical infrastructure by the end of this year.