As pressure builds on the Korean currency and global capital flows become more volatile, the country’s central bank is signaling that won-denominated stablecoins could create more problems than solutions if introduced too broadly.
At an international finance gathering in Hong Kong, Bank of Korea Governor Lee Chang-yong made it clear that stablecoins backed by the won raise unresolved risks for capital control and foreign exchange management.
From the central bank’s perspective, these tokens would not primarily serve domestic payments. Instead, they would likely be used in cross-border transfers, precisely where authorities have the least tolerance for leakage during periods of market stress.
Lee warned that when combined with US dollar stablecoins, won-based tokens could offer new routes for moving funds across borders outside traditional oversight, weakening existing safeguards designed to stabilize the currency.
Those concerns land in the middle of an already fractured political debate. South Korea’s long-awaited Digital Asset Basic Act, intended to define the country’s next phase of crypto regulation, has stalled as lawmakers argue over who should control stablecoin issuance.
The central bank favors a narrow model led by commercial banks, viewing them as easier to supervise and less likely to amplify systemic risk. Industry groups, by contrast, are pushing for wider participation that would include non-bank firms operating under licensing and supervision.
Attempts to bridge the gap, including proposals for bank-anchored consortium models, have yet to gain traction.
The stalemate is no longer limited to stablecoins. Broader initiatives tied to South Korea’s crypto roadmap have also been pushed back, including discussions around allowing listed companies to trade digital assets and introducing spot crypto ETFs.
What was once framed as a gradual opening to regulated crypto markets is now being reassessed through the lens of currency defense and capital flow discipline.
The central bank’s caution comes at a sensitive moment. With trade tensions resurfacing and concerns over potential dollar outflows growing, policymakers are wary of approving instruments that could accelerate capital flight during volatility.
For now, the message from Seoul’s monetary authorities is unambiguous: innovation will be considered, but only if it does not undermine control over the won.
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