Bank of Korea Warns Stablecoins Could Complicate Forex Management

The Bank of Korea has expressed reservations about the potential consequences of implementing a domestic stablecoin framework in South Korea. Governor Rhee Chang-yong stated that while the central bank does not oppose the issuance of won-based stablecoins, it could complicate foreign exchange management by increasing the demand for dollar-pegged tokens. Rhee cautioned that allowing stablecoins could make it easier to convert them into dollar-backed tokens, which could undermine efforts to manage capital flows and maintain forex stability. This perspective aligns with Rhee's earlier warnings that permitting private firms to issue stablecoins could weaken the effectiveness of monetary policy and complicate capital flow management, especially in a market already dominated by dollar-pegged tokens.

These concerns arise as South Korea's ruling Democratic Party introduced the Digital Asset Basic Act on June 10. This legislation proposes a licensing regime for stablecoin issuers, allowing companies with at least ₩500 million in equity capital to issue Korean won-backed tokens, subject to approval by the Financial Services Commission (FSC). The bill aims to require stablecoin issuers to maintain adequate reserves and implement bankruptcy remoteness measures to protect users. Democratic Party leaders argue that a properly regulated domestic stablecoin framework would help reduce dependence on US-dollar-backed tokens like USDT and USDC, which currently dominate local trading volumes. The party views a KRW-denominated stablecoin as a strategic tool for strengthening South Korea’s monetary sovereignty and retaining capital within the national economy. Lee’s administration has previously warned that failing to introduce domestic stablecoins could risk Korea’s monetary influence being eroded by foreign-backed assets.

In response to these developments, South Korea’s FSC has unveiled a new crypto roadmap, which includes plans to legalize spot cryptocurrency exchange-traded funds (ETFs) and advance stablecoin regulation by the second half of 2025. The roadmap is designed to complement the Digital Asset Basic Act and align the country’s digital asset framework with global standards. It includes measures to establish a regulatory framework for fund structure, custody, valuation, and investor protection, all of which are key prerequisites for launching spot crypto ETFs in South Korea. Stablecoin oversight remains a central element of the FSC’s plan, with calls for stronger controls over how stablecoins are issued, redeemed, and backed.