Bank of Korea governor voices concern over non-bank stablecoin issuance
Bank of Korea (BOK) Governor Lee Chang-yong has issued a sharp warning about the dangers of allowing non-bank institutions to issue won-denominated stablecoins, arguing it could create unprecedented confusion within South Korea’s financial system.
Speaking at a press conference following the Monetary Policy Committee’s decision to hold the base interest rate at 2.50%, Lee cautioned that such a move may mirror the chaos of the 19th-century private currency era, where multiple forms of money undermined monetary policy, reports Cryptopolitan.
“It would become extremely difficult to implement effective policy,” he said, warning that South Korea could be forced to revert back to a stricter central banking structure if missteps occur.
Policy and profit structures face disruption
The governor also expressed concerns that stablecoin issuance by non-banks could conflict with the country’s foreign exchange liberalization policy and fundamentally alter the payment and profit models of financial institutions. Lee noted that if private firms were permitted to handle settlements and issue money-like tokens, it would place central authorities in a weaker position to manage capital flows and currency value. While the BOK acknowledges the growing momentum behind stablecoin regulation, Lee made clear that this issue cannot be resolved by the central bank alone. Final decisions, he emphasized, require coordination among multiple government ministries, suggesting ongoing debates within South Korea’s policymaking apparatus.
South Korea tests middle ground with sandbox approach
Despite the governor’s cautious stance, South Korea’s broader political climate is tilting in favor of innovation. President Lee Jae-myung’s administration has backed efforts to legalize won-based stablecoins, adding fuel to the regulatory tug-of-war between the Bank of Korea and the Financial Services Commission (FSC). In response, the BOK is pursuing a regulatory sandbox strategy, allowing stablecoin trials in a controlled environment without compromising financial oversight. Under this initiative, a consortium of banks, fintechs, and exchanges may collaborate to test won-stablecoin models, striking a balance between innovation and monetary control. The sandbox offers a critical compromise as the country crafts its Digital Asset Basic Act, potentially reshaping South Korea’s crypto and payments ecosystem.
Recently we wrote that stablecoin startup Agora has raised $50 million in a Series A funding round led by Paradigm, setting the stage for a broader rollout of its white-label stablecoin offering, AUSD.
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