South Korea Abandons Financial Reform Plans

South Korean President Lee Jae-myung’s campaign pledge to reform the nation’s financial authorities has been shelved, creating fresh uncertainty over the future of crypto regulation. The government, the ruling Democratic Party, and the presidential office confirmed that the overhaul would be reconsidered from the ground up rather than advanced in its current form.

“Mofia” Reform Put on Hold

As a result, the existing structure of the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) will remain intact for the foreseeable future. Han Jung-ae, the ruling party’s chief policymaker, made the announcement at the National Assembly, noting that all previously discussed restructuring measures have been abandoned.

The reform had originally gained traction due to concerns that the Ministry of Economy and Finance and the financial authorities had become too large and powerful. Critics referred to the ministry and its officials as the “Mofia,” a portmanteau of “Ministry” and “mafia,” reflecting their outsized influence. President Lee’s promise to dismantle this structure was widely popular and included proposals to reduce the scope of both the ministry and the financial authorities.

Plans had called for splitting the FSC, transferring policy functions to the Ministry of Economy and Finance, and creating a new supervisory body focused on consumer protection. A separate Budget and Planning Office under the Prime Minister’s office was also under consideration. All these proposals have now been scrapped.

Crypto Industry Faces Uncertainty

The decision marks a major reversal for South Korea’s crypto sector, which had been awaiting clarity on which agency would take charge of digital asset regulation under the proposed reforms. Industry players fear that the delay could stall progress on legalizing a Korean Won-backed stablecoin.

More than 10 banks, including the country’s largest commercial lenders, have already formed a council to explore a joint stablecoin initiative, with plans to potentially issue it through a dedicated venture. Whether these efforts will gain regulatory support now remains unclear.