Governor Lee expressed concerns, stating that ‘the Korean won stablecoin is a substitute for currency, and if non-banking institutions issue it at will, it could significantly undermine the effectiveness of monetary policy.” (Image courtesy of Yonhap)
SEOUL, June 10 (Korea Bizwire) — As momentum builds for the launch of won-backed stablecoins in South Korea, the Bank of Korea (BOK) is mounting a vocal defense of the traditional monetary system, warning that poorly designed frameworks could undermine financial stability and weaken the won’s position as legal tender.
The central bank will host a high-profile conference on July 1 titled “Stablecoins in Korea: Impacts and Policy Responses,” aiming to temper growing enthusiasm around domestic stablecoin issuance.
Keynote speakers will include Seoul National University professors Kim Young-sik (economics) and Lee Jung-soo (law), with former and current Monetary Policy Board members moderating expert discussions.
The BOK acknowledges the global rise of stablecoins, particularly dollar-backed variants, but remains wary of their impact on monetary policy and currency sovereignty. Officials are expected to highlight the risks of a potential “coin run” — a mass sell-off of stablecoins — if issuance is allowed without strict oversight.
At the heart of the tension is a push from some policymakers and fintech advocates to allow private institutions — beyond just banks — to issue won-backed stablecoins as part of a “Korean model.”
The proposal gained traction after Kim Yong-beom, now policy chief at the presidential office, outlined such a vision in a white paper late last month during his tenure at Hashed Open Research, a blockchain think tank.
In response, companies like Kakao Pay saw their shares rally on expectations they could benefit from a new regulatory framework.
BOK Raises Alarm Over Won-Backed Stablecoins Amid Regulatory Uncertainty (Image supported by ChatGPT)
However, Bank of Korea Governor Rhee Chang-yong has repeatedly voiced concern. At a May 29 press conference, Rhee warned that privately issued won-stablecoins could become de facto money substitutes, weakening the effectiveness of monetary policy.
Speaking again at an international central banking forum on June 2, he cautioned against enabling non-banking entities to circumvent capital regulations through stablecoin issuance.
Rhee is expected to reiterate these concerns in a speech marking the central bank’s 75th anniversary on June 12.
Behind the BOK’s intensifying campaign lies growing unease over the speed of policy shifts following South Korea’s change in administration. While enthusiasm for digital asset innovation is growing under the new government, significant legislative and regulatory hurdles remain.
Key laws — including the Electronic Financial Transactions Act, Capital Markets Act, Foreign Exchange Transactions Act, and Special Financial Information Act — would require major revisions to accommodate stablecoin usage.
Despite investor optimism, industry insiders suggest a full rollout of won-based stablecoins is unlikely before 2026. “With so many pressing economic issues on the table, prioritization will play a role,” said one industry executive. “A stablecoin framework may not materialize within the year.”
Until then, the Bank of Korea appears determined to shape the debate — and defend the integrity of the nation’s currency.
M. H. Lee (mhlee@koreabizwire.com)
