South Korea’s central bank is taking a cautious yet deliberate step toward integrating stablecoins into its financial system, with a strong preference for banks leading the charge. Deputy Governor Ryoo Sangdai emphasized that commercial banks—due to their regulatory oversight and operational scale—should be the initial issuers of any won-denominated stablecoin. The strategy is designed to reduce market risks and establish a strong safety net during the rollout phase.
Speaking at a press briefing on Tuesday, Ryoo noted that extending stablecoin issuance to non-bank institutions may be considered later, but only after the framework has proven resilient. This phased approach reflects the Bank of Korea’s goal of minimizing disruptions while fostering innovation under tight supervision.
Currency Controls and Financial Structure Remain Central Concerns
Despite this cautious green light, Bank of Korea officials remain uneasy about the macroeconomic consequences of stablecoins. Ryoo pointed to risks such as accelerating capital flight, especially if won-based stablecoins are exchanged for dollar-backed tokens—posing a threat to Korea’s foreign exchange management strategy.
Bank Governor Rhee Chang-yong reiterated that while he isn’t outright opposed to stablecoins, their cross-border implications could disrupt FX controls and challenge long-held policies around monetary independence. The concerns also include a potential shift in banking structure, with the possibility of narrow banking models gaining traction.
These warnings come as South Korea’s Democratic Party continues to push forward digital asset reforms, including the proposed Digital Asset Basic Act, which would authorize firms with minimum equity of $368,000 to issue stablecoins—a legislative milestone that may fast-track market adoption if approved.
CBDC Pilot Positioned as Defensive Strategy
In parallel to the stablecoin discussion, the Bank of Korea is doubling down on its Central Bank Digital Currency (CBDC) efforts. Ryoo revealed that the CBDC initiative is being viewed as a strategic counterbalance to the rapid growth of stablecoins. South Korea’s CBDC pilot, which includes collaboration with the Financial Services Commission and Financial Supervisory Service, is scheduled to conclude its first phase by June 30.
However, the timeline for the second pilot remains uncertain. Ryoo stated that future testing will depend on evolving policy clarity and further dialogue with domestic banks. Globally, South Korea joins a growing list of nations exploring stablecoins—Visa has launched a stablecoin partnership in Africa, and countries like Russia and the UAE are accelerating local stablecoin initiatives.
Quick Facts
- South Korea’s central bank supports a gradual, bank-led rollout of won stablecoins.
- Officials fear capital outflows and FX instability from premature stablecoin use.
- A CBDC pilot is ongoing as a counter-strategy, with second phase timing unclear.
- Global stablecoin momentum rises with Visa, Russia, and UAE all exploring options.
