South Korea’s central bank is urging a gradual and regulated rollout of stablecoins, with commercial banks to take the lead as primary issuers. According to statements made by Bank of Korea (BOK) Deputy Governor Ryoo Sangdai, the country aims to balance innovation with stability by limiting the initial issuance of won-pegged stablecoins to banks.
Banks First, Others Later
In a press conference reported by Yonhap News, Ryoo emphasized:
“It would be desirable to initially allow stablecoin issuance primarily through banks… and gradually expand it to the non-banking sector.”
The rationale behind this approach is to ensure strong oversight and consumer protection, given banks operate under strict financial regulation. Ryoo pointed out that this strategy is aimed at establishing a safety net to mitigate risks of market disruption or financial harm to consumers.
Concerns Over Capital Flight and FX Risk
Despite being open to the idea of stablecoins, the BOK maintains key reservations, particularly around capital outflows and the Korean won’s foreign exchange exposure. Ryoo warned that a widespread rollout of stablecoins could:
- Accelerate capital outflows
- Challenge the central bank’s control over monetary policy
- Alter the country’s cautious stance on foreign exchange liberalization
He also raised the prospect of financial restructuring, noting potential implications for narrow banking models, where banks only hold safe assets and don’t engage in lending.
Digital Asset Basic Act and Political Push
The conversation around stablecoins has gained momentum following the ruling Democratic Party’s proposal of the Digital Asset Basic Act. This bill, introduced on June 10, would allow companies with at least $368,000 in capital to issue stablecoins. However, Ryoo stressed that no official government stance on stablecoins has yet been adopted, and the legal framework remains uncertain.
CBDC as a Counterbalance
In parallel, the Bank of Korea continues to explore a central bank digital currency (CBDC), seen as a countermeasure to privately issued stablecoins. A pilot test involving the BOK, Financial Services Commission, and Financial Supervisory Service is set to conclude by June 30. Further testing phases will be decided in consultation with commercial banks, reflecting ongoing regulatory caution.
Global Stablecoin Rollouts Accelerate
While South Korea proceeds with a measured rollout, other nations are advancing aggressively. Notably, Visa and Yellow Card Financial recently launched a stablecoin initiative in Africa to enhance cross-border payment accessibility.
Conclusion: South Korea’s central bank is taking a cautious and regulated approach to stablecoins. By placing banks at the center of the rollout and aligning efforts with the CBDC pilot, the BOK is prioritizing financial stability while slowly embracing digital asset innovation.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.