- The Bank of Korea renamed its Digital Currency Research Lab and established a new Virtual Asset Committee to handle stablecoin regulation.
- Project Han River, a test program for digital currency and tokenized deposits, was suspended due to bank concerns.
- Major banks are forming a consortium to issue stablecoins, leveraging new government policy efforts.
- Two rival stablecoin bills have been proposed in Korea’s National Assembly, with differences on interest payments.
- Experts warn that a won-pegged stablecoin could raise volatility and monetary policy risks due to South Korea’s currency controls.
The Bank of Korea has renamed its Digital Currency Research Lab, dropping the word “research” to better reflect its operational role. The central bank also set up a Virtual Asset Committee focused on stablecoin policy, following the introduction of two stablecoin bills by both ruling and opposition political parties this week.
A Bank of Korea representative told Yonhap News that the name change clarifies the department is “not only for research,” but said that most of the division’s work will remain the same.
Several Korean media outlets reported the central bank paused Project Han River, its pilot for wholesale central bank digital currency (CBDC) and tokenized deposit technology, after seven national banks raised concerns. These banks are now creating a consortium to issue their own stablecoins, which are digital tokens tied to a fiat currency like the dollar or won, in response to new government measures supporting stablecoin growth.
The central bank has stated that the only main difference between its Project Han digital deposit tokens and proposed private stablecoins is that banks would serve as the issuers for both. Project Han combined deposit tokens—digital versions of money kept in bank accounts—with wholesale CBDCs, which are used mainly for settlements between banks.
When the Bank of Korea first introduced Project Han River, it emphasized that this was a central bank digital currency, even though it was not for retail customers. Brazil’s central bank used a similar approach. Experts say this may confuse the public, especially following the negative response to retail CBDCs in the United States.
Lawmakers introduced two different stablecoin bills this week, each taking a different stance on whether stablecoins should pay interest to holders. “Stablecoins are surging like a tsunami, but we are fighting over who will run a small boat in the face of a tsunami,” said Min Byung-duk, ruling party committee chair, according to the Financial Times.
The Bank of Korea has raised financial stability concerns related to stablecoins and seeks a supervisory role. Officials want banks to have the exclusive right to issue stablecoins, but see this as unlikely with current proposals.
Analysts note that South Korea’s currency, the won, is not currently traded outside the country and is limited to set trading hours. A stablecoin pegged to the won could enable 24/7 global trading, presenting regulatory challenges. While some currency controls have been eased, restrictions remain.
Professor Park Sun-Young wrote in the Korean JoongAng Daily that increased global stablecoin trading could cause exchange rate volatility, especially while the won remains nonconvertible offshore. She cautioned that this could open the door to speculative attacks and complicate the government’s ability to manage currency policy.
Officials say rapid changes in international stablecoin law—such as the United States’ “Genius Act”—are compelling Korea to act quickly. Some observers remain unsure whether any won-pegged stablecoin would become large enough to affect the nation’s broader monetary or exchange rate policies.
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