Crypto Traders on Edge as Korea Enacts Key Law – Is the “Kimchi Premium” at Risk Next?

Korea’s National Policy Committee pushed the debate on the “second stage” crypto act until after the June 3 local elections.

Crypto Framework Revised in Time of Need

Korea’s Maeil Business Newspaper reported uncertainty in the crypto industry deepening after the National Policy Committee issued the Digital Assets Framework Act from the 31st.^St of the March agenda.

Lawmakers sent five finance-related bills to a subcommittee that day: the Administrative Regulation Framework Act, the Credit Information Protection Act, the Microfinance Support Act, the Insurance Business Act, and the Capital Markets Act. Not a single crypto-related bill was introduced, but the Political Affairs Committee meeting session received Kim Nam-geun’s “Partial Amendment to the Act for the Protection of Users of Real Assets, etc.” and referred it to the Bill Review Subcommittee.

Lawmakers chose to park the second-phase bill during a critical election window rather than wrangle over divisive provisions on banks and big trading companies, which have become “significant landmines” in the legislative process. Speculations in the Korean political media suggest that the presidency and the Financial Services Commission (FSC) are not completely aligned on how far ownership intervals should be reached and how strong the stablecoin issuance should be, adding to the endless narrative.

The proposed crypto framework comes at a very important time, as the political tensions mentioned above are also two important battles taking place between the main players in the Korean cryptocurrency and financial industry.

Stablecoins Fight

South Korea recently had a tussle between the Bank of Korea and the FSC over who will issue won-denominated stablecoins.

The BOK is pursuing a bank-led corporate model where commercial banks must hold at least 51% of any issuer of won-denominated stablecoins. Bitcoinist reported this in October last year.

The FSC, however, accepts that stablecoins need strong safeguards but opposes a strict 51% bank ownership rule, warning that it will exclude technology platforms, fintechs and exchanges that are truly building user-facing products.

These rules for stablecoin issuers must be strictly enforced under the Basic Law of Digital Heritage, so each month of delay leaves an edge and either KRW stablecoin issuers operate in the gray area or stick to the sidelines. According to local outlet Aju Economy, this is a real issue that affects the industry. Reported and industry insiders lament:

We need the bill to be finalized as soon as possible to determine the direction of our business, but in the meantime, we are keeping all possibilities open, which increases the cost burden.

The Equity-Cap Fight

The FSC has been supporting proposals to manage large crypto exchanges like securities or ATS-style markets, where no single “same person” can legally own more than 15–20%. After a hard push, regulators and the ruling party have agreed on about a 20% ceiling for “major shareholders”, with a small exception allowing up to 34% stakes for new entrants, similar to the 33.3% veto line in Korea’s Commercial Act. Bitcoinist covered the story early last month.

For existing giants like Upbit and Bithumb, this is a post-facto rule. Founders and early backers already hold more than 20% stakes, so a hard cap would force them to sell significant portions of their equity in a three-year transition (six years for smaller exchanges). This may hamper ongoing M&A and halt the re-regulation of the local market.

What This Means for the Market

South Korea seems poised to move from ad-hoc hacking to a broader crypto system. This delay comes on top of recent moves from Seoul to increase oversight through strategies such as AI surveillance, fraud investigations and tax tracking, as well as loosening some restrictions, such as limiting previous stake proposals and re-processing corporate crypto trading.

In the near term, control uncertainty about KRW stablecoins and exchange ownership may keep Korean property risks high and make local listings or market arrangements difficult to model. After the election, the bank-heavy stablecoin framework and tighter governance rules may favor conservative incumbents and banks over smaller, high-beta platforms. This can reshape the liquidity and altcoin inventory.

Legislators undermining ownership features or opening stablecoin issuance beyond banks would be a clear risk-taking signal for KRW-denominated products and global companies eyeing the Korean retail scene.

At the moment of writing, BTC trades for exactly $66k on the daily chart. Source: BTCUSDT on Tradingview.

Cover image from Perplexity. BTCUSDT chart from Tradingview.

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