South Korea

South Korea's central bank has suspended CBDC development and shifted focus to stablecoins, with eight banks collaborating on a won-backed stablecoin project. The new government has submitted legislation allowing qualifying companies, including nonbanks, to issue stablecoins, signaling a significant policy change in digital currency regulation.

South Korea is launching a three-month pilot of its central bank digital currency (digital won), allowing up to 100,000 citizens to use it for retail purchases at participating merchants including 7-Eleven. This represents a significant step in the country's digital currency regulatory framework development, with transaction caps and privacy implications that financial institutions and retailers need to monitor.

South Korea's central bank is evaluating circuit breaker-style safeguards for crypto markets after a major transfer error at Bithumb exchange caused significant losses. This represents a potential new regulatory framework to address operational risks and volatility in digital asset trading, signaling increased oversight of crypto exchanges.

The Bank of Korea has recommended implementing stock-market-style circuit breakers on domestic cryptocurrency exchanges, which would be incorporated into the pending Digital Asset Basic Act. This proposal follows a major incident at Bithumb exchange and aims to stabilize crypto markets through automatic trading halts during sharp price swings or abnormal orders.

South Korea's Financial Intelligence Unit (FIU) has imposed a $24.6 million fine and a 6-month partial suspension on cryptocurrency exchange Bithumb for anti-money laundering violations, including failures in customer identity verification (KYC) and improper transaction blocking. This enforcement action reflects broader regulatory tightening in South Korea's crypto market, following similar penalties on other major exchanges like Upbit and Korbit.

South Korea's Financial Intelligence Unit (FIU) has issued a preliminary notice of sanctions against cryptocurrency exchange Bithumb for AML/KYC compliance failures, including transactions with unregistered overseas platforms. This enforcement action signals regulators' tightening oversight of digital asset platforms and follows similar penalties against other major exchanges. The final penalty will be determined after a sanctions deliberation committee review later this month.

Korea's Financial Services Commission has released a draft roadmap for mandatory sustainability reporting aligned with ISSB standards, starting in 2028 for large KOSPI-listed companies. The standards include climate disclosures with a 3-year transition period for Scope 3 emissions reporting and optional third-party assurance initially. This represents a significant new ESG compliance requirement for affected companies in Korea.

South Korea's National Tax Service lost $4.8 million in seized cryptocurrency due to a photo leak exposing hardware wallet seed phrases, marking the second major loss of seized crypto in the country. Multiple government agencies have launched investigations and pledged to overhaul digital asset seizure and management procedures, signaling upcoming regulatory changes for handling cryptocurrency in tax enforcement operations.

Korea has tabled a draft disclosure framework aligned with the International Sustainability Standards Board (ISSB), signaling regulatory advancement in ESG reporting standards. This represents a meaningful step toward standardized sustainability reporting requirements for companies operating in Korea.