On Friday, the South Korean government unveiled a comprehensive digital asset strategy as part of its '2026 Economic Growth Strategy.' This marks a significant policy shift from its traditionally regulatory-focused approach toward fostering institutional adoption and industrial development.
This plan includes stablecoin-related legislation, approval of physical ETFs, and the introduction of government payments utilizing blockchain technology. It represents the most ambitious overhaul of cryptocurrency policy since the Terra-Luna collapse (2022).
Moving toward the establishment of a stablecoin regulatory framework
The Financial Services Commission (FSC) aims to finalize what is known as the 'Digital Asset Phase Two Bill' by the first quarter of 2026. This will establish a clear regulatory framework for stablecoins.
Under the new rules, stablecoin issuers must obtain government approval after meeting capital requirements. They will be required to hold reserve assets equal in value to the issued tokens and guarantee users' redemption rights.
This framework aims to prevent a recurrence of collapses like the 2022 Terra-Luna incident, which led to the disappearance of approximately 4.45 trillion yen (equivalent to about 40 billion USD) in market value and triggered global regulatory tightening on algorithmic stablecoins.
The government also plans to establish regulations regarding cross-border transactions using stablecoins, potentially opening the door to blockchain-based international payments and overseas remittances.
Physical digital asset ETF listing is under consideration
A major step supporting institutional investor adoption is South Korea's official approval this year of plans to introduce physical digital asset ETFs.
This move follows the launch of physical Bitcoin ETFs in the U.S. in January 2024 and the introduction of similar products in Hong Kong. Under previous regulations, South Korea did not recognize cryptocurrencies as eligible underlying assets for ETFs, preventing domestic investors from accessing these products.
Market participants expect that approval will accelerate participation by institutional investors, including pension funds and corporate funds.
Government to leverage blockchain in public finance
Among the most ambitious initiatives is a plan to integrate blockchain technology into government operations. The goal is to implement one-fourth of national fiscal expenditures using digital currencies, particularly deposit-type tokens, by 2030. 'Implement one-fourth of national fiscal expenditures using digital currencies by 2030.'
The government will launch pilot experiments before the end of 2026, starting with the use of deposit-type tokens for electric vehicle charging infrastructure subsidy programs. If successful, the initiative is expected to expand to other subsidies and vouchers.
This approach enables real-time tracking of fund usage. It is expected to eliminate fraudulent claims and significantly reduce administrative costs.
Related legislative efforts are expected to be enacted by the end of 2026, including amendments to the Bank of Korea Act and the National Treasury Act.
South Korea's cryptocurrency policy reaches a turning point
Industry analysts have evaluated this announcement as a landmark turning point in South Korea's digital asset sector.
One market participant pointed out, 'This marks the first time the government officially recognizes virtual assets as a legitimate financial and fiscal instrument, rather than speculative assets.'
This comprehensive strategy reflects South Korea's ambition to secure a leading position in the global digital asset competition amid accelerating regulatory efforts by major countries on cryptocurrencies and stablecoins.
