South Korea’s Central Bank Backs Cautious, Bank-Led Stablecoin Launch

The Bank of Korea has made it clear: any rollout of won-denominated stablecoins must begin with the country’s rigorously regulated commercial banks. Deputy Governor Ryoo Sang-dai emphasized in a recent press briefing that banks, subject to higher levels of financial oversight, are best positioned to pilot stablecoin issuance.

This phased approach is intended to provide a safety net, minimizing the risk of market disruption or consumer harm as South Korea navigates the emerging digital asset landscape.

Concerns Over Monetary Policy and Capital Flows Remain

Despite the cautious optimism, central bank officials remain wary of the potential impact stablecoins could have on monetary policy and capital movement. Ryoo warned that a rapid or poorly regulated rollout could accelerate capital outflows and shift the country’s stance on foreign exchange liberalization.

Governor Rhee Chang-yong echoed these concerns, noting the challenge of managing the foreign exchange implications of a widely used won-based digital token.

Did you know?
South Korea’s stablecoin initiative is partly a response to the dominance of US dollar-linked coins in global crypto markets. By launching a won-pegged stablecoin, the country aims to enhance financial sovereignty and reduce reliance on foreign digital assets.

Legislative Momentum and Industry Response

South Korea’s legislative landscape is rapidly evolving to accommodate digital assets. President Lee Jae-myung’s Democratic Party has introduced the Digital Asset Basic Act, which would allow firms with sufficient capital to issue stablecoins. However, the central bank’s position is that regulatory experience and robust risk controls must come first, with banks leading the way before expansion to non-bank issuers.

Eight of the nation’s largest banks are already preparing to launch a won-pegged stablecoin, aiming to reduce reliance on dollar-based coins and strengthen domestic financial sovereignty.

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Global Trends and Local Caution Shape Policy

South Korea’s approach contrasts with the rapid, tech-led introduction of dollar-pegged stablecoins in other markets. While global players pioneered stablecoins outside the banking sector, South Korea’s central bank is determined to integrate digital assets through established financial institutions, ensuring oversight and systemic safety.

This aligns with international trends, as central banks worldwide move to balance innovation with risk management.

Safety Nets and Risk Assessments Will Define the Next Phase

The central bank’s insistence on a gradual, bank-led rollout is rooted in the need for thorough risk assessment and strong consumer protections. Ryoo Sang-dai stressed that only after banks have demonstrated safe and effective issuance should stablecoins be considered for the broader non-banking sector.

The process will be closely monitored, with any expansion contingent on regulatory confidence and market stability.