South Korea central bank promotes creation of stablecoins
Bank of Korea (BOK) Deputy Governor Ryoo Sangdai emphasized that commercial banks should be the primary issuers of won-based stablecoins in South Korea, at least in the initial stages.
Speaking at a press conference on Tuesday, Ryoo argued that the higher regulatory oversight imposed on banks would provide a safer environment for introducing stablecoins to the public, reports Cointelegraph.
He suggested that once the financial system adapts, the issuance of stablecoins could gradually be expanded to non-banking institutions. This stepwise approach, he said, is necessary to safeguard the financial system against potential disruptions or consumer harm that could arise if less regulated entities were allowed to enter the market too quickly.
Concerns Over Capital Outflows and Currency Stability
Despite the growing momentum toward stablecoin adoption, the BOK remains cautious. Ryoo warned that introducing stablecoins could accelerate capital outflows, potentially destabilizing the Korean won and challenging the country’s foreign exchange controls. He also noted that the rise of stablecoins could necessitate broader financial sector reforms, including the possible adoption of narrow banking models where banks would hold fully reserved assets.
Similarly, BOK Governor Rhee Chang-yong reiterated his concerns, particularly about managing the cross-border use of stablecoins and their impact on Korea’s monetary policy. The debate continues, even as President Lee Jae-myung’s administration pushes the Digital Asset Basic Act, which would enable stablecoin issuance by companies with a relatively low capital requirement.
CBDCs Positioned as a Strategic Countermeasure
In addition to supporting a cautious rollout of stablecoins, the BOK is actively exploring central bank digital currencies (CBDCs) as a potential counterbalance. Ryoo confirmed that the central bank’s current CBDC pilot, conducted alongside the Financial Services Commission and the Financial Supervisory Service, is set to conclude by the end of June. However, further pilot programs will hinge on government decisions regarding stablecoin policy and regulatory clarity.
Globally, the trend toward stablecoin adoption is accelerating, with Visa partnering with Yellow Card Financial to scale stablecoin payments in Africa and Abu Dhabi launching a dirham-pegged stablecoin. Ryoo’s comments underscore South Korea’s intent to carefully manage this shift, ensuring that stability and consumer protection remain at the forefront of its digital asset strategy.
Recently we wrote that South Korea’s Financial Services Commission (FSC) is preparing a comprehensive investigation into the transaction fees charged by domestic cryptocurrency exchanges, signaling a shift toward cost transparency and user protection.
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