South Korea is rewriting its foreign exchange regulations to accommodate stablecoins. Lawmakers are amending the Foreign Exchange Transactions Act (FETA) to formally classify stablecoins as a recognized means of payment, placing dollar-pegged tokens in the same legal category as government-issued currency.
The amendment targets three regulatory concerns: unregulated cross-border transactions, money laundering, and tax evasion. Large volumes of dollar-pegged stablecoins circulating domestically can function as informal channels for moving money abroad, a flow that FETA was designed to monitor. Authorities are fast-tracking the amendments with a goal of implementing adequate regulatory measures by the end of 2026.
Legislative Timeline
The push began on October 28, 2025, when Rep. Park Sung-hoon disclosed plans to propose legislation classifying stablecoins as legal payment instruments under FETA. On May 7, 2026, a FETA amendment passed requiring virtual asset transfer businesses to register with the Ministry of Economy and Finance. Non-compliance carries penalties of up to three years in prison.
The Bank of Korea has advocated for stricter foreign exchange regulations, particularly tighter controls over dollar stablecoin outflows.
Broader Regulatory Framework
The FETA changes represent one component of a larger regulatory overhaul. The Digital Asset Basic Act, currently under development, is the other major piece. As of October 22, 2026, the Financial Services Commission chairman stated that consultations on this act were in final stages, with a National Assembly review planned for November 2026.
South Korea currently lacks a specific licensing regime for stablecoin issuers. Policy discussions have focused on partnerships between banks and fintech companies, addressing who may issue stablecoins and what capital requirements should apply.
Market Implications
Registration requirements for virtual asset transfer businesses will increase transparency, making intermediaries known to and accountable to the Ministry of Economy and Finance. Smaller operators face higher barriers to entry due to registration costs, compliance infrastructure requirements, and enforcement penalties. The National Assembly's planned November 2026 review will serve as a checkpoint for whether South Korea meets its end-of-year regulatory timeline.
