South Korea’s Central Bank Reaffirms Bank-First Stablecoin Model

South Korea’s central bank has reportedly renewed its push to keep Korean won-pegged stablecoin issuance in the hands of commercial banks, warning lawmakers that privately issued digital tokens could undermine monetary policy and create new foreign-exchange and financial-stability risks.

In a report submitted to South Korea’s National Assembly Strategy and Finance Committee, the Bank of Korea (BOK) described won stablecoins as “currency-like substitutes” and said their introduction must account not only for industrial benefits but also for monetary policy, foreign exchange stability and financial risks, according to local reporting. 

The central bank reiterated concerns that stablecoins could be used to bypass foreign exchange regulations, including prior reporting requirements, and argued that allowing non-bank entities to issue them independently could conflict with Korea’s separation of banking and commerce principles. 

It added that banks, which are subject to capital, governance and compliance standards, should be permitted first, with any expansion beyond banks proceeding gradually after risk assessments. 

The report lands as lawmakers debate a delayed stablecoin framework, with one of the main sticking points being who should be eligible to issue won-pegged tokens and how much control banks should hold in any issuing entity.

Cointelegraph reached out to the Bank of Korea for more information, but had not received a response by publication.