The central bank of South Korea has allegedly renewed its push to keep Korean won-pegged stablecoin issuance in the hands of commercial banks, alerting policymakers that privately issued digital tokens could diminish monetary policy and create new foreign-exchange and financial-stability risks.
Recently, a report was submitted to the National Assembly Strategy and Finance Committee of South Korea. The Bank of Korea (BOK) mentioned won stablecoins as “currency-like substitutes” and said their rollout must account not only for industrial profits but also for monetary policy, foreign exchange stability and financial risks, as per the report.
The central bank restated concerns that stablecoins could be used to avoid foreign exchange regulations, comprising earlier reporting needs, and claimed that permitting non-bank bodies to issue them independently could conflict with the separation of banking and commerce principles of Korea.
It also mentioned that banks, which are subject to capital, governance and compliance standards, should be allowed first, with any widening beyond banks advancing slowly after risk assessments.
The report lands as policymakers debate a postponed stablecoin framework, with one of the prominent sticking points being who should be eligible to issue won-pegged tokens and how much control banks should hold in any issuing body.
The Echo of Previous Warnings
The bank allegedly stated programmable stablecoins could back the digital asset revolution and function as payment tools, but it also floated structural safeguards, including a bank-focused consortium model and a statutory interagency policy body that could systemise approvals and supervision over regulators.
As per the reports, the Bank of Korea also quoted the GENIUS Act framework of the United States as an example of cross-agency supervision that comprises the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corporation.
The report reflects its previous warnings, which claim that banks should be heading the introduction for stablecoin issuance since they are so far subject to strict regulatory needs. Although, this approach has witnessed a repulsion from the members of the industry, including some policymakers.
The chair of the Kaia DLT Foundation, Sangmin Seo, has earlier mentioned that the argument for banks heading the stablecoin launch is short on logical foundation. Seo mentioned that setting clearer rules for issuers can reduce risks.
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