Woofun AI reports that a structural pivot in South Korea's digital asset policy has emerged, driven by People Power Party lawmaker Kim Sang-hoon's proposal for a two-track won-denominated stablecoin framework. This initiative positions banks as the primary issuers to guarantee systemic stability, while reserving a secondary role for fintech firms to drive future innovation and distribution channels. The proposal arises directly from the prolonged legislative gridlock surrounding comprehensive digital asset regulations, seeking to bypass current impasses through a phased, institution-led rollout rather than waiting for a unified legal framework to materialize.

Woofun AI data shows that the specific mechanics of this strategy were detailed by Kim Sang-hoon during an interview with Edaily on Aug. 20, held at the National Assembly Members' Office Building in Yeouido. Central to his argument is the implementation of a "50%+1" issuance rule, which mandates that traditional banks must hold a majority stake in any stablecoin issuance entity. This structural requirement is designed to ensure that conservative financial institutions retain ultimate control over the asset's creation and management, thereby embedding a layer of institutional security into the digital currency's foundation. By enforcing this majority ownership threshold, the proposal aims to prevent speculative or unregulated entities from dominating the initial phase of the market.

Structurally, the plan relies on a distinct two-track approach that separates the functions of issuance and distribution across different time horizons. In the early stage, banks will exclusively handle the issuance of the stablecoins, leveraging their existing capital reserves and regulatory compliance frameworks to establish trust. Later, fintech companies will be integrated into the ecosystem, tasked with managing distribution networks and driving technological and product innovation. This phased methodology is explicitly intended to mitigate the extreme volatility associated with unbacked cryptocurrencies, ensuring that the digital asset remains firmly anchored to real-world value while still allowing for eventual market evolution and user-centric improvements.

The urgency of this proposal is underscored by the current regulatory vacuum, as the basic digital asset law has faced repeated delays in the National Assembly. Consequently, the landscape remains fragmented, with the Financial Services Commission overseeing virtual asset service providers primarily through the Specific Financial Information Act, while broader aspects of the digital asset economy remain largely unregulated. This disjointed oversight has created significant uncertainty for market participants, who lack clarity on the legal status of stablecoins pegged to fiat currencies like the won. The absence of a comprehensive framework has left a gap that this bank-led initiative seeks to fill.

A more critical variable is the rationale behind selecting banks as the vanguard for this rollout, which hinges on their existing adherence to strict financial oversight. Because banks are already subject to rigorous anti-money laundering protocols and consumer protection standards, their involvement provides a clear regulatory pathway that reduces the risk of illicit activity and consumer harm. This approach positions stablecoins as a credible bridge between traditional finance and digital assets, leveraging the trust inherent in established financial institutions. By anchoring the digital currency in the traditional finance sector, the proposal aims to neutralize skepticism and provide a secure entry point for mainstream adoption.

Strategically, South Korea is well-positioned to capitalize on this model due to its high smartphone penetration and a tech-savvy population, which could significantly enhance payment efficiency and facilitate cross-border transactions. The government's ambition to become a global hub for digital finance aligns with this potential, yet the choice between bank-led and fintech-led issuance presents inherent tensions. While banks offer stability, industry concerns persist regarding market competition and whether fintechs will have a meaningful role if banks dominate the initial phase. Some experts argue that a parallel system might be more effective, noting that banks are traditionally risk-averse and could slow adoption, whereas fintechs are more agile but may have to wait for the regulatory framework to mature.

Kim Sang-hoon's proposal highlights the delicate balance between innovation and stability that defines South Korea's digital asset policy. While the basic digital asset law remains pending, his two-track strategy offers a pragmatic path forward that prioritizes security without entirely excluding future innovation. The coming months will reveal whether lawmakers can translate this vision into legislation, and whether the market will embrace a bank-led stablecoin ecosystem. This marks a significant shift toward institutional control in a sector previously dominated by decentralized speculation.