Kim Min-seok Unveils Plan to Legalize Won Stablecoins, Tokenized Securities

Kim Min-seok, a former prime minister running in the Democratic Party's Aug. 17 leadership election, unveiled a financial reform agenda centered on legalizing won-denominated stablecoins and tokenized securities, or STOs. He also pledged to push for a Digital Asset Basic Act and set up a special committee reporting directly to the party leader to oversee related policy.

At a press conference at the National Assembly's communication hall on July 22, Kim presented a "4+1 reform" plan that combines four areas of reform — finance, regional growth, the judiciary and the media — with constitutional revision. After prosecutorial reform, he said, the state should focus its capacity on livelihood-centered social reform that changes people's daily lives, putting financial reform first.

Kim also pledged to expand public-participation funds and adopt principles for regional investment. In addition, he said he would pursue the Digital Asset Basic Act and the legalization of won stablecoins and tokenized securities. The plan also calls for stronger policy finance for lower-income households and tighter consumer protection. To coordinate the agenda, he promised to establish a "Special Committee on Public Assets and Financial Innovation" under the party leader.

The Digital Asset Basic Act would follow the Virtual Asset User Protection Act, which took effect in 2024. The second-stage bill would cover virtual-asset issuance and distribution, as well as entry regulations for service providers. Several bills are pending before the National Assembly's Political Affairs Committee. Differences over who should be allowed to issue won stablecoins, how reserve assets should be managed and the governance structure of crypto exchanges have delayed work on a single bill.

The biggest issue in legalizing won stablecoins is the issuer. The Financial Services Commission and related agencies have been reviewing a framework that would allow issuance mainly through consortia in which banks hold more than 50% of the equity, while also considering the scope for participation by nonbank fintech firms. The FSC discussed a bank-led issuance model at a virtual asset committee meeting in February, but said nothing has been finalized. The minimum capital requirement for issuers, the composition of reserve assets and users' redemption rights also remain to be determined.

For tokenized securities, the focus has shifted from legislation to implementation. Revisions to the Electronic Securities Act and the Capital Markets Act, allowing issuance and distribution records for securities to be recorded and managed using distributed ledger technology, passed the National Assembly plenary session in January and were promulgated in February. The revised laws are scheduled to take effect in February 2027. The FSC is now operating a tokenized securities consultative body to draft lower-level rules on licensing requirements for issuer account management institutions and over-the-counter brokerage firms, as well as investor protection and settlement infrastructure.