South Korea’s Central Bank Seeks Tight Control Over Stablecoin Issuance

The proposal reflects growing concerns over money laundering, systemic risk, and financial stability. Officials argue that allowing unregulated or lightly regulated firms to issue digital tokens pegged to the Korean won could expose the broader economy to unnecessary shocks.

Why the BOK Wants Banks in Control

The BOK maintains that commercial banks are best positioned to issue stablecoins in the early stages. They already operate under strict capital requirements, corporate governance rules, and anti-money laundering standards. According to the central bank, this framework reduces the risk of sudden insolvencies or liquidity crises spilling over into the real economy.

The regulator also recommended a phased approach. Non-bank financial institutions could eventually participate, but only after authorities assess their capacity to absorb potential losses and manage redemption risks safely.

Recent events have reinforced the BOK’s cautious stance. A February 2026 incident involving Bithumb — where the exchange mistakenly transferred $40 billion worth of so-called “ghost” Bitcoin to clients — rattled confidence in parts of the domestic crypto sector. While the error was corrected, it intensified calls for tighter oversight.

Digital Asset Basic Act Faces Internal Tensions

The stablecoin debate is unfolding as lawmakers work through Phase 2 of the Digital Asset Basic Act, a key piece of South Korea’s evolving crypto framework. Progress has been slow, partly due to differing views among regulators.

The Financial Services Commission has signaled that overly restrictive rules could curb fintech innovation and limit the competitiveness of local firms. By contrast, the BOK is prioritizing financial stability and systemic safeguards.

One compromise under discussion is a consortium model in which banks must hold at least 51% equity in any stablecoin-issuing entity. Proposed rules would also require 100% reserve backing in high-quality liquid assets such as bank deposits or government bonds. The goal is to guarantee redemptions at par and prevent bankruptcy risks from cascading across the system.

Protecting Monetary Sovereignty

The push for won-backed stablecoins aligns with broader political priorities. President Lee Jae-myung has emphasized the importance of safeguarding South Korea’s monetary sovereignty, particularly as USD-based stablecoins continue to dominate global crypto markets.

At the same time, the BOK is advancing pilot programs for a central bank digital currency. These trials explore how a digital won could function alongside bank-issued “deposit tokens,” potentially supporting government subsidies and large-scale settlements.

Major institutions including KB Kookmin Bank, Shinhan Bank, and Woori Bank are reportedly preparing for possible stablecoin launches as early as late 2026, pending regulatory clarity.

How South Korea Compares Globally

South Korea’s cautious, bank-led model contrasts with other jurisdictions. Japan has adopted a “bank-plus” framework that allows licensed trust companies and certain non-bank entities to issue stablecoins. Meanwhile, the European Union has implemented the Markets in Crypto-Assets regulation, known as Markets in Crypto-Assets Regulation, which harmonizes stablecoin oversight across member states.

While Japan and the EU both require full reserve backing and redemption at face value, their licensing structures differ. South Korea now appears poised to begin with the most conservative model of the three — at least in its initial phase.

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