South Korea is gearing up for a major overhaul of its digital wallet system to facilitate stablecoin payments, while the fallout from Bithumb’s recent blunder is prompting heightened regulatory scrutiny in the digital currency sector.
South Korea was poised to publish a new law governing digital assets known as the Digital Asset Basic Act of Korea (DABA). This regulation will specify which companies may issue stablecoins pegged to the Korean won. Additionally, it will impose obligations on issuers to adhere to anti-money laundering (AML) and counter-terrorist financing (CFT) regulations.
DABA will complement the Korean Virtual Asset User Protection Act (VAUPA) by expanding protections to digital assets, including stablecoins, non-fungible tokens (NFTs), and tokenized assets. Among the other measures of DABA is distinguishing between “general digital assets” and “asset-linked digital assets. Under the new rules, issuers are also required to maintain a capital of KRW 500 million ($360,000).
Following the announcement, several financial firms are now testing proof-of-concept implementations to incorporate stablecoin payments into their digital wallet platforms. Naver Pay, Kakao Pay, and Toss are reportedly establishing their stablecoin payment infrastructure, according to a February 2 report by Chosun Daily. Additionally, in November 2025, reports indicated that large financial groups—KB, Shinhan, Hana, and Woori Financial—were strengthening their positions in the stablecoin market.
Despite positive developments in South Korea’s digital asset market, experts believe “key issues” remain.
“Both domestically and internationally, the institutional integration of stablecoins is underway, but core regulatory designs such as issuance requirements, redemption obligations, and interest payment bans are still in progress,” Attorney Joo Seong-hwan of Lee & Ko explained. “Due to the ‘separation of financial and industrial capital’ policy and virtual asset service provider (VASP) concurrent business regulations, financial institutions face constraints in direct entry,” emphasizing, “Institutional improvements are urgently needed for financial institutions to enter the stablecoin industry.”
Probes on illicit Bitcoin practices following Bithumb blunder
Alongside the DABA news, the country’s financial watchdog, the Financial Supervisory Service (FSS), is increasing its oversight of the digital currency sector after a series of exchange issues, alleged price manipulation, and suspicious trading activities.
FSS Governor Lee Chan-jin said it will ramp up investigations in 2026 into high-risk practices such as “whale” trading, coordinated price manipulation, and schemes that exploit exchange outages or deposit/withdrawal suspensions, known in South Korea as “gating,” local news outlet Yonhap reported.
The stricter tone comes amid a series of exchange-related incidents. On February 8, digital currency exchange Bithumb claimed it had recovered 99.7% of excess BTC that were “mistakenly credited to users” due to a promotional error. While Bithumb said no customer assets were compromised, the discrepancy still triggered price swings and compensation payments.
“99.7% of the overpaid Bitcoin was recovered on the same day as the incident, and the remaining 0.3% (1,788 BTC) was repaid using company assets, ensuring 100% accuracy,” Bithumb said in a post.
However, the issue prompted a response from the Financial Services Commission (FSC), chaired by Lee Ok-won, which held an emergency inspection on Sunday to conduct a comprehensive review of the internal controls of all local digital currency exchanges, in coordination with the FSS and the Korea Financial Intelligence Unit (KoFIU).
Inside South Korea’s rapidly evolving digital economy
South Korea is among the Asian countries that have been at the forefront of digital transformation, particularly in digital assets.
Earlier this year, the country saw mixed momentum in digital assets, passing new laws to create a regulated framework for tokenized securities. Google Play (NASDAQ: GOOGL) announced it will block unregistered overseas digital currency exchange and wallet apps starting January 28. Meanwhile, South Korea and Italy are deepening cooperation on artificial intelligence (AI) and chips, underscoring the need for tighter oversight and expanded investment in next-generation technologies.
In other news, the Financial Services Commission (FSC) called to lift the ban on corporate digital asset investing, allowing listed companies and professional investors to allocate up to 5% of their equity to digital currencies.
Watch: What’s ahead for crypto regulation? Highlights from Blockchain Futurist Conference 2025
Source: https://coingeek.com/south-korea-revamps-digital-wallets-amid-bithumb-controversy/
