Key Takeaways:
- South Korea’s central bank wants regulated banks to lead stablecoin issuance, with gradual expansion to other sectors.
- Concerns over capital flight, FX risks, and unclear regulations are shaping a cautious rollout — with a CBDC viewed as a counterbalance to private stablecoins.
South Korea’s central bank is signaling cautious support for stablecoins, urging a phased introduction beginning with regulated commercial banks. Bank of Korea (BOK) deputy governor Ryoo Sangdai said this week that banks should be the initial issuers of a potential won-denominated stablecoin to ensure financial security and minimize disruption.
In a June 18 press conference covered by Yonhap News, Ryoo emphasized the importance of leveraging the country’s strictly regulated banking system as a protective foundation.
“It would be desirable to initially allow stablecoin issuance primarily through banks, which are subject to higher levels of financial regulation, and gradually expand it to the non-banking sector,” he said.
Risk Mitigation Remains a Key Concern
Despite this tentative green light, Ryoo made it clear that stablecoins are not without risk. The BOK remains concerned about potential capital outflows, the impact on foreign exchange liberalization, and the possibility of consumer harm from unregulated issuance.
He also warned about broader financial sector restructuring risks, such as the emergence of “narrow banking” — where banks become limited in function due to digital asset issuance taking precedence over traditional banking roles.
BOK Governor Rhee Chang-yong also expressed cautious support, noting that while he does not oppose a won-based stablecoin in principle, managing its foreign exchange implications poses a significant regulatory challenge.
Digital Asset Law and Political Momentum
Momentum is building on the legislative side as well. On June 10, South Korea’s newly elected Democratic Party, led by President Lee Jae-myung, introduced the Digital Asset Basic Act, which would allow companies with at least $368,000 in equity capital to issue stablecoins.
However, Ryoo noted that due to “significant uncertainty” around policy clarity and inter-agency coordination, stablecoin pilot programs may be delayed until a regulatory consensus is reached.
Also Read: Ripple Partners with BDACS to Secure XRP & RLUSD Custody in South Korea
CBDC Seen as a Counterbalance
As South Korea inches closer to stablecoin issuance, its central bank is also doubling down on its central bank digital currency (CBDC) pilot.
During the same press event, Ryoo stated that the BOK sees a CBDC as a necessary “countermeasure to stablecoins” — aiming to provide a regulated, government-backed digital alternative.
A CBDC test involving the Bank of Korea, the Financial Services Commission, and the Financial Supervisory Service is currently underway and is expected to conclude on June 30.
A Global Trend: Stablecoins on the Rise
South Korea’s cautious but deliberate approach comes amid a global stablecoin expansion trend.
- Visa recently partnered with Yellow Card Financial to promote stablecoin payments across Africa.
- The Russian finance ministry proposed a government-backed stablecoin in April.
- In Abu Dhabi, three major institutions are collaborating on a dirham-pegged stablecoin.
South Korea’s efforts to balance innovation with regulation place it among a growing list of nations exploring how to integrate stablecoins into traditional financial systems.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses
