Stablecoin Issuance Ought To Start With Banks, States BOK Authorities

South Korea should permit banks to provide stablecoins first before gradually expanding approvals to non-banking sectors, a senior reserve bank official said Tuesday, as the country advances crypto-friendly policies under President Lee Jae-myung’s administration. Bank of Korea Deputy Governor Ryoo Sang-dai delivered the message to heads of significant commercial banks during a meeting at the reserve bank’s Seoul head office, according to Yonhap News, the country’s largest news firm. “It would be desirable to initially allow stablecoin issuance primarily through banks, which are subject to higher levels of monetary policy, and gradually broaden it to the non-banking sector,” Deputy Governor Ryoo Sang-dai stated Tuesday. The approach comes as South Korea comes to grips with massive growth in digital possession trading as transactions surged from $12.9 billion (17.59 trillion won) in Q3 2024 to $42.4 billion (57.9 trillion won) in Q1 2025. Almost half of all digital possessions moved abroad throughout the very first quarter of 2025– worth $19.5 billion– remained in stablecoins, raising concerns about capital outflows that threaten the country’s monetary sovereignty. “The goal is to establish a safeguard, considering the potential for market interruption or consumer harm,” Sang-dai stated. Changing the video game The deputy guv warned that while stablecoins offer innovation potential, they might “shift the essential stance we have actually maintained on forex liberalization and the internationalization of the Korean won.” He also flagged issues about potential market interruption, financial instability, and the requirement to consider models like “narrow banking,” where institutions only supply payment services without financing. Bank of Korea Guv Rhee Chang-yong has also indicated support for stablecoins, while urging care, according to a report from Korea JoongAng Daily on Sunday. “To be clear, won-backed stablecoins are needed and [I] do not disagree with its issuance,” Rhee stated during an interview last Wednesday, however mentioned the requirement to carefully examine their potential influence on foreign exchange management. President Lee, who took office this month following a snap election, has made stablecoin regulation a top priority. His administration introduced the Digital Asset Basic Act, which would allow domestic companies with at least $366,749 (500 million won) in capital to issue won-backed stablecoins. The Bank of Korea is also exploring a hybrid model where its planned deposit tokens might coexist with private-sector stablecoins on public blockchains. But some industry professionals remain skeptical, with Peter Chung, head of research at algorithmic crypto trading firm Presto Labs, previously telling Decrypt it’s “unclear” how integrating tokenized deposits and private-sector stablecoins would truly protect monetary sovereignty. Edited by Sebastian Sinclair

South Korea should allow banks to issue stablecoins first before gradually expanding permissions to non-banking sectors, a senior central bank official said Tuesday, as the nation advances crypto-friendly policies under President Lee Jae-myung’s administration. Bank of Korea Governor Rhee Chang-yong has also indicated support for stablecoins, while urging caution, according to a report from Korea JoongAng Daily on Sunday. The Bank of Korea is also exploring a hybrid model where its planned deposit tokens could coexist with private-sector stablecoins on public blockchains.