South Korea’s central bank is doubling down on a restrictive stance for the future of digital won, formally arguing that only commercial banks should be permitted to issue stablecoins pegged to the national currency. In a recent report to the National Assembly’s Strategy and Finance Committee, the Bank of Korea (BOK) framed privately issued, non-bank stablecoins as significant systemic risks, warning they could undermine monetary policy control and create new foreign exchange and financial stability vulnerabilities.
Central Bank Cites Monetary Policy and FX Control Concerns
The BOK’s report, cited by local media, describes won-pegged stablecoins as “currency-like substitutes.” It stresses that their introduction must be evaluated beyond potential industrial benefits, requiring a careful assessment of impacts on monetary policy transmission, foreign exchange stability, and overall financial risks. A core concern is regulatory arbitrage; the bank warns that stablecoins could be used to bypass existing foreign exchange regulations, such as mandatory prior reporting for large cross-border transactions.
Furthermore, the central bank links its position to Korea’s foundational “separation of banking and commerce” principle. It argues that allowing non-financial, commercial entities to issue currency-like instruments could conflict with this long-standing regulatory philosophy. To manage these risks, the BOK advocates for a phased approach: permitting only banks—which are already subject to rigorous capital adequacy, governance, and anti-money laundering compliance standards—to issue stablecoins initially. Any expansion to non-bank issuers, it suggests, should only proceed gradually following comprehensive, case-by-case risk assessments.
Proposed Framework Emphasizes Inter-Agency Coordination
While cautioning against risks, the report acknowledges that well-structured, programmable stablecoins could foster digital asset innovation and serve as efficient payment tools. To balance innovation with safety, the BOK floated specific structural safeguards. It proposes a “bank-centered consortium model” for issuance and, critically, the creation of a statutory interagency policy body. This body would coordinate approvals and ongoing supervision across multiple regulators, a model it explicitly references from the United States’ proposed GENIUS Act framework, which involves the Treasury Department, Federal Reserve, and FDIC.
Industry and Legislative Stalemate Persists
The BOK’s position reinforces its long-held view that banks must lead stablecoin rollout due to their existing regulatory perimeter. However, this bank-centric approach faces significant headwinds from industry participants and some lawmakers who see it as unnecessarily restrictive.
Sangmin Seo, chair of the Kaia DLT Foundation, previously challenged the logic of a bank-mandated model, stating that establishing clear, technology-neutral rules for all potential issuers would be more effective at mitigating risks than pre-determining the actor. This debate has become the primary obstacle to enacting a comprehensive stablecoin law. A key unresolved issue is whether banks must hold a majority ownership stake in any issuing entity.
This legislative gridlock has delayed the regulatory framework. Initially expected in October 2025, then anticipated for a January 2026 resolution, the bill’s final timeline remains uncertain as committee negotiations continue. The BOK’s report injects the central bank’s authoritative voice into this stalemate, reinforcing its call for caution and a bank-first paradigm as lawmakers struggle to find compromise.
