Bank of Korea Pushes Bank First Won Stablecoin Plan

TLDR

• BoK wants won stablecoins issued mainly by licensed banks

• Central bank warns of capital outflow and FX risks

• Proposal includes banking consortium and policy body

• Gradual expansion to private firms may follow safety review

South Korea’s central bank has renewed its call for a bank-led approach to won stablecoins. The Bank of Korea said issuance should begin within the regulated banking sector. It warned that private issuance could affect monetary and financial stability.

The position was submitted in a report to the National Assembly’s Strategy and Finance Committee. The central bank said legislation must consider monetary policy and foreign exchange stability. It also urged safeguards before broader market participation.

Central Bank Warns of Monetary and Capital Risks

The Bank of Korea stated that non-bank issued stablecoins may create conflicts between industry and financial capital. It said such issuance could challenge the separation of money and industry. The report also cited risks of economic power concentration and financial restructuring pressures.

The central bank warned that won-pegged stablecoins could be used to bypass foreign exchange controls. It said there is a “high risk” of capital outflows through digital tokens. For this reason, it argued stablecoins should be allowed first in the banking sector.

Banks are subject to capital, governance, and compliance standards. The BoK said these safeguards reduce operational and systemic risks. It added that regulated institutions are better equipped to manage stablecoin issuance responsibly.

Proposal for Banking Consortium and Oversight Body

The central bank urged lawmakers to establish safety mechanisms in upcoming legislation. It proposed forming a banking consortium for issuance of won-backed stablecoins. It also recommended a statutory policy body involving relevant authorities.

According to the BoK, a coordinated regulatory framework is necessary. The bank previously submitted a proposal calling for a pan-governmental response. It said oversight should involve financial watchdogs and related institutions.

The BoK added that once risks are understood under a bank-led structure, expansion could follow. It said it would be “desirable” to gradually allow private firms to issue stablecoins after safety is confirmed. This phased approach aims to limit financial risk during early adoption.

Governor Rhee Reiterates Longstanding Position

The central bank’s stance aligns with remarks by Governor Rhee Chang-yong. Speaking at the Asian Financial Forum in Hong Kong in January, he warned that won stablecoins could be used to circumvent capital controls. He said such tokens may facilitate transfers into dollar-denominated stablecoins.

In a July interview with CNBC, Rhee repeated concerns about capital flow management. He said won-pegged stablecoins could “expedite easier transfer” into U.S. dollar stablecoins. He also noted that non-bank issuance makes supervision more complex.

The BoK restated its view in a February written response to a lawmaker. It said issuance should begin with a banking-sector consortium. It added that expanding to non-financial firms should occur only after safety is verified.

Stablecoin Debate Intensifies Amid Market Scrutiny

The debate over won stablecoins comes amid increased scrutiny of South Korea’s digital asset sector. A recent error at crypto exchange Bithumb raised regulatory concerns. The incident involved mistaken transfers of large amounts of Bitcoin to users.

The central bank has also warned of potential de-peg risks for won stablecoins. It said careful design and regulatory clarity are required. Lawmakers are now reviewing proposals that would shape the legal framework.

South Korea’s approach reflects broader global discussions on stablecoin oversight. The BoK maintains that financial stability and monetary control remain priorities. For now, it continues to advocate a cautious, bank-led rollout of won-pegged stablecoins.

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