South Korea’s central bank wants gradual stablecoin rollout

South Korea’s central bank, the Bank of Korea (BOK), advocates for a gradual and cautious rollout of won-pegged stablecoins. The senior deputy governor, Ryoo Sang-dai, emphasized that the introduction should begin with highly regulated commercial banks before expanding to non-bank sectors based on the experience gained. This approach aims to protect monetary policy and the transaction settlement system from potential disruptions caused by stablecoins.

The BOK is concerned about the impact of stablecoins on capital flows and financial market stability, stressing the need for a safety net to protect users and maintain steady financial markets. The central bank also seeks to prevent misuse of stablecoins for illicit activities such as money laundering and terrorist financing by ensuring strong regulatory oversight.

Meanwhile, eight major South Korean banks have formed a consortium to launch a won-pegged stablecoin, planning two issuance models: trust-based and deposit-linked. This private sector initiative aims to challenge the dominance of dollar-based stablecoins in the domestic market and secure the competitiveness and independence of South Korea’s financial system. The project aligns with legislative efforts led by President Lee Jae-myung and the Democratic Party to establish a regulatory framework for stablecoins, fulfilling campaign promises to modernize digital asset regulation and keep South Korea competitive in the digital currency space.