In a bold policy move, Lee Jae-myung, the frontrunner in South Korea’s upcoming presidential election, has proposed the launch of a Korean won-pegged stablecoin. The Democratic Party candidate believes the digital asset could help protect national wealth, prevent capital outflows, and modernize South Korea’s financial infrastructure.
The proposal comes at a time when stablecoins—digital currencies backed by fiat assets—are gaining traction worldwide, particularly in the U.S., where dollar-backed tokens dominate global crypto markets.
A Digital Strategy for the Won
During a televised forum on May 8, Lee warned that South Korea risks falling behind if it does not adapt quickly to digital financial trends. He pointed out that capital flight from the Korean economy could increase if local investors continue shifting funds into foreign digital assets, especially dollar-based stablecoins.
Lee urged the government to support innovation in blockchain and fintech by enabling a secure, regulated stablecoin ecosystem. He emphasized that a digital won stablecoin could serve as a counterbalance to U.S.-based assets and help retain value within South Korea.
Critics Recall the Terra Collapse
Not everyone supports the proposal. Political rival Lee Jun-seok of the Reform Party called the idea “dangerous,” citing the failure of Terra’s KRT stablecoin, which was also pegged to the Korean won. Terra’s collapse in 2022 triggered a massive loss in investor confidence and global regulatory scrutiny.
However, Lee Jae-myung’s team clarified that his proposal is fundamentally different. Unlike Terra’s algorithmic model, the proposed stablecoin would be fully backed by real-world reserves such as cash or government bonds—ensuring transparency and liquidity.
Regulatory Oversight from the Central Bank
The Bank of Korea (BOK) has stated that it must play a central role in any won-based stablecoin project. Officials argue that unregulated digital assets tied to the national currency could threaten monetary policy and financial stability.
The BOK has not opposed stablecoins outright but insists on having legal control over authorization and compliance processes. The central bank is also piloting its own CBDC (Central Bank Digital Currency), although private-sector stablecoin projects remain under consideration.
Conclusion
Lee Jae-myung’s stablecoin proposal has ignited debate across political, financial, and tech sectors. While critics warn of past failures, supporters see an opportunity to digitize the Korean economy while preserving sovereignty. As the election draws near, the future of a won-based stablecoin may become a defining issue in how South Korea approaches blockchain innovation and global competition.