South Korea is at the center of an escalating policy battle as lawmakers push for won‑pegged stablecoins while the Bank of Korea (BOK) has warned against it. The central bank is of the view that stablecoins pose a serious risk to monetary control and financial stability.
According to a Financial Times report, the ruling party has proposed a new law called ‘Digital Asset Basic Act’ which allows private firms to issue Korean won–backed stablecoins, provided they have at least ₩500 million ($360,000) in equity. The move is part of a broader push to retain crypto capital within national borders.
Bank of Korea sounds alarm
At the same time, BOK Governor Rhee Chang‑yong has cautioned that won‑based stablecoins could rapidly be converted into dollar‑pegged tokens, amplifying pressure on Korea’s foreign exchange regime. He also warned that permitting non-bank issuers to mint stablecoins could replicate a chaotic “free banking” era.
The central bank insists on limiting issuance rights to regulated commercial banks under tight oversight, but lawmakers argue that a broader rollout is necessary to ensure competitiveness and financial innovation. Proponents believe won-pegged stablecoins will keep crypto assets onshore, enable new fintech business models, and prevent capital erosion, even if dollar tokens remain broadly popular.
Not against stablecoins, but forex concerns remain: BOK
Earlier in June, Governor Chang‑yong made his stand clear that he wasn’t against won-based stablecoins per se, but said there would be forex implications. The BOK has advocated for gradual implementation, starting with participation from major banks to pilot issuance, rather than an open-market launch with non-bank issuers upfront.
Tensions are mounting as policymakers push for rapid stablecoin adoption to maintain competitiveness and prevent capital outflows, but at the same time, they need to prioritize monetary sovereignty and manage risk. Finding the balance will be key for South Korea’s financial growth.