- The Bank of Korea aims for commercial banks to issue won-based stablecoins first, before expanding distribution to other sectors.
- Regulators express concerns about market disruption, potential consumer harm, and possible impacts on capital outflows.
- A new law proposes allowing companies with at least $368,000 in equity to issue stablecoins in South Korea.
- The central bank is testing a central bank digital currency (CBDC) as a way to counter the influence of stablecoins.
- Stablecoin adoption is increasing globally, with recent moves in Africa, Russia, and Abu Dhabi.
The Bank of Korea said on Tuesday it wants regulated banks to be the first issuers of won-backed stablecoins in South Korea, citing the need for strong oversight and consumer safety. The announcement came during a press conference with Deputy Governor Ryoo Sangdai, who explained that banks are subject to stricter financial regulations, making them the preferred choice for initial stablecoin issuance.
Ryoo stated, “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 emphasized that this approach aims to create a safety net and reduce the risk of sudden market disruption or harm to consumers.
Despite these plans, the central bank voiced several concerns about introducing stablecoins. Ryoo noted that launching stablecoins could lead to increases in capital outflows and impact existing policies on foreign exchange controls and the Korean won’s international use. He also pointed out the possible need to rethink how the financial sector is structured, mentioning “the potential introduction of narrow banking”—a banking model with restricted lending activities.
At a separate event on June 18, Bank of Korea Governor Rhee Chang-yong said he did not oppose the idea of a won-based stablecoin but remained cautious about managing its foreign exchange aspects. Earlier, on June 10, the ruling Democratic Party introduced the Digital Asset Basic Act, which proposes that companies with at least $368,000 in equity could be permitted to issue stablecoins.
Ryoo added that the central bank will continue advancing its central bank digital currency (CBDC) project as a response to stablecoins. A CBDC pilot test, involving government agencies like the Financial Services Commission and the Financial Supervisory Service, is set to conclude on June 30.
Globally, several regions are making similar moves. On June 19, VISA partnered with Yellow Card Financial to promote stablecoin payments in Africa. Russia’s finance ministry and major financial institutions in Abu Dhabi have also announced stablecoin initiatives in recent months.
Ryoo said the timing of a second CBDC pilot would depend on government policy discussions with banks, as South Korea’s policy on stablecoins remains unsettled.
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