- Bank of Korea urges banks to control stablecoins
- Lawmakers divided over who can issue won tokens
- FX stability concerns slow South Korea stablecoin framework
South Korea’s stablecoin framework has entered a tense phase as lawmakers clash over who should control won-pegged token issuance. The debate intensified after the Bank of Korea renewed its call to restrict issuance rights to commercial banks.
In a report delivered to the National Assembly Strategy and Finance Committee, the central bank outlined its concerns. According to local reporting, officials described won-backed stablecoins as currency-like substitutes that could influence liquidity conditions. Consequently, they warned that privately issued tokens might weaken monetary policy transmission.
The Bank of Korea argued that policymakers must look beyond industrial innovation. Moreover, regulators should consider foreign exchange stability and broader financial risks before approving new issuers.
Officials stressed that stablecoins could allow users to bypass existing foreign exchange reporting requirements. Additionally, the central bank raised concerns about Korea’s long-standing separation of banking and commerce. Allowing non-bank corporations to issue stablecoins independently could blur regulatory boundaries. Therefore, the bank proposed that commercial lenders should lead any rollout.
Banks already operate under strict capital, governance, and compliance standards. Hence, authorities can monitor risks through established supervisory systems. The central bank added that any expansion beyond banks should proceed gradually and follow comprehensive risk assessments.
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Central Bank Flags Monetary and FX Stability Risks
Beyond issuer eligibility, the report focused heavily on macroeconomic safeguards. Officials warned that widespread stablecoin use could complicate liquidity management. Moreover, cross-border transfers through digital tokens might weaken oversight of capital flows.
According to the submission, privately issued won stablecoins could sidestep prior foreign exchange reporting obligations. Consequently, regulators fear that such activity may reduce transparency in currency markets. The Bank of Korea, therefore, urged lawmakers to embed strict monitoring mechanisms into the final framework.
Bank-First Model Fuels Political and Industry Pushback
While lawmakers review the delayed stablecoin bill, disagreement over issuer eligibility has stalled progress. The Bank of Korea floated a bank-centered consortium structure to manage issuance. Moreover, it suggested creating a statutory interagency body to coordinate supervision across regulators.
Officials pointed to the United States GENIUS Act framework as a reference model. According to the report, that structure involves coordination between the Treasury Department, the Federal Reserve, and the Federal Deposit Insurance Corporation. Korean authorities may consider similar cross-agency oversight.
However, industry representatives continue challenging the bank-first approach. Sangmin Seo, chair of the Kaia DLT Foundation, said that the argument lacks a logical foundation. He argued that clearer licensing rules for issuers could mitigate risks without limiting competition.
Lawmakers Weigh Innovation Against Regulatory Control
As parliamentary discussions continue, policymakers must balance financial stability with digital innovation. Programmable stablecoins could improve payment efficiency and support tokenized assets.
Nevertheless, the central bank insists that regulatory clarity must precede expansion. The final legislative outcome will shape how South Korea integrates stablecoins into its financial system. South Korea now stands at a regulatory crossroads as lawmakers weigh innovation against monetary control. The final decision on issuer eligibility will shape the country’s stablecoin future.
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