The Bank of Korea (BOK) has indicated a cautious yet strategic approach to the integration of stablecoins into South Korea’s financial system. Ryoo Sangdai, the deputy governor of the Bank of Korea, has reportedly articulated a preference for a gradual rollout of stablecoins, with an initial focus on commercial banks as the primary issuers. This stance, revealed during a press conference on Tuesday, June 24, underscores the central bank’s commitment to ensuring financial stability and consumer protection amidst the evolving digital asset environment.
According to reports from Yonhap News, Ryoo Sangdai emphasized that any won-denominated stablecoin should first be introduced through regulated commercial banks. He stated, “It would be desirable to initially allow stablecoin issuance primarily through banks, which are subject to higher levels of financial regulation, and gradually expand it to the non-banking sector.” The underlying rationale for this phased approach, as explained by Ryoo, is to “establish a safety net, considering the potential for market disruption or consumer harm.” This highlights the BOK’s proactive stance in mitigating potential risks associated with the nascent stablecoin market while cautiously exploring its benefits.
Despite this measured openness, the Bank of Korea maintains certain reservations regarding stablecoins. Ryoo Sangdai voiced concerns that a widespread stablecoin rollout could potentially accelerate capital outflows from South Korea. Such a development, he noted, could “shift the fundamental stance we have maintained on foreign exchange liberalization, and the internationalization of the Korean won.” Furthermore, he raised the issue of potential implications for the financial sector’s restructuring, including the possible introduction of “narrow banking,” a concept where banks are restricted to holding highly liquid assets, thereby limiting their risk-taking activities. These concerns demonstrate the BOK’s comprehensive risk assessment, looking beyond immediate financial stability to broader macroeconomic effects.
These recent statements echo sentiments previously expressed by Bank of Korea governor Rhee Chang-yong. During a press conference on June 18, Rhee had indicated that he did not oppose the concept of a won-based stablecoin. However, he also clearly articulated his worries about the complexities involved in managing the foreign exchange aspects of such a digital token. This consistent messaging from the BOK’s leadership underscores a unified, cautious, and pragmatic approach to stablecoin adoption in the country.
The BOK’s current position comes in the wake of legislative efforts by South Korea’s political sphere. On June 10, the Democratic Party, led by newly elected president Lee Jae-myung, introduced the Digital Asset Basic Act. This proposed legislation, if enacted, would permit companies with a minimum equity capital of $368,000 to issue stablecoins. This legislative initiative signals a growing political will to integrate digital assets into the mainstream financial system, creating a dynamic interplay between legislative proposals and central bank policy considerations.
In parallel with its considerations for stablecoins, the Bank of Korea is actively pursuing the development of a central bank digital currency (CBDC). Chosun Daily reported that during the same press conference, Ryoo Sangdai stated that the BOK would continue to advance its CBDC project as a “countermeasure to stablecoins.” This suggests that the BOK views a CBDC not just as a separate digital currency initiative, but also as a strategic tool to manage and potentially counterbalance the impact of privately issued stablecoins on the financial system. The BOK, in collaboration with other government agencies, including the Financial Services Commission and the Financial Supervisory Service, launched a CBDC test on March 24, which is scheduled to conclude on June 30. This ongoing experimentation highlights the BOK’s commitment to exploring various forms of digital money and their potential implications.
Looking ahead, Ryoo Sangdai indicated that the timing for a second CBDC pilot test would be determined through consultation with commercial banks. This decision is influenced by the “significant uncertainty regarding related laws and policies” concerning stablecoins and the absence of a clearly established government position on the matter. This consultative approach underscores the BOK’s desire to collaborate with financial institutions and adapt its CBDC strategy based on the evolving regulatory landscape for digital assets.
South Korea’s deliberations on stablecoins are part of a broader global trend. International interest and development in stablecoins are rapidly expanding. For instance, on June 19, Bloomberg reported on a significant partnership between credit card giant Visa and Yellow Card Financial, an African stablecoin payments provider. This collaboration aims to accelerate stablecoin adoption across the African continent, demonstrating the increasing utility and reach of stablecoins in facilitating cross-border payments and financial inclusion. Furthermore, in April, a Russian finance ministry official reportedly floated a plan for the Russian government to develop its own stablecoin, signaling a potential move towards state-backed digital currencies. In the same month, a trio of prominent institutions in Abu Dhabi—Abu Dhabi Global Market, First Abu Dhabi Bank, and Hub71—joined forces to create a dirham-pegged stablecoin. These international examples underscore the diverse approaches and motivations behind stablecoin development worldwide, ranging from private sector innovation to government-led initiatives, all contributing to a rapidly evolving global financial landscape.
