South Korea’s central bank is doubling down on a banks-first approach for won-denominated stablecoins. In a report submitted to parliament on Monday, the Bank of Korea argues regulators should initially authorize only licensed commercial banks to issue won stablecoins, pointing to money laundering and financial stability risks.
The central bank’s view is not a blanket rejection of stablecoins. It is a sequencing plan. Start with entities that already meet capital, governance, and compliance standards, then consider broader participation later. The same report argues expansion to non-bank institutions can come after regulators assess whether those firms can absorb and manage the risks that come with bank-like payment instruments.
The main rationale is that won stablecoins would behave like payment money, not just another crypto token. When a token is designed to hold par value to the won and circulate for settlement, the issuer effectively performs functions that look like deposit-taking, redemption management, and liquidity backstopping. The Bank of Korea’s stance is that banks already operate under high standards for capital adequacy, financial soundness, governance, and compliance, which lowers the probability of issuer failure spilling into the broader system.
A second concern is regulatory perimeter. The report warns a won stablecoin could bypass South Korea’s foreign exchange rules, which are largely applied only to banks. If a non-bank issuer controls the stablecoin rails and the on and off ramps, the token could become a route that weakens FX oversight and complicates cross-border enforcement.
The third concern is corporate control. South Korea has long maintained principles that restrict non-financial companies from owning or controlling banks. The Bank of Korea flags that letting non-bank issuers run a won stablecoin could pressure that separation by recreating bank-like functions inside industrial or platform firms, even if those firms are not banks.
A banks-first rule reshapes who can capture the payment rails that stablecoins create.
First, it sets the compliance baseline. Banks already run KYC, transaction monitoring, sanctions screening, and audit programs at scale. That pushes the stablecoin market toward strict AML and reporting standards from day one, which can reduce the chance of a stablecoin becoming a laundering vector or a shadow settlement channel.
Second, it changes competitive dynamics. Fintech and crypto-native issuers may still participate, but likely as technology providers, distribution partners, or minority stakeholders rather than primary issuers. That can slow experimentation at the edges, but it can also reduce the probability of issuer runs caused by weak reserves, poor governance, or fragile redemption mechanics.
Third, it affects liquidity structure. If banks issue the tokens, the redemption promise looks closer to traditional payment infrastructure. That can encourage deeper integration with domestic banking rails, but it can also make issuance more conservative, with stricter reserve composition and tighter limits on how tokens move across venues.
South Korea is a high-participation retail market with a mature exchange ecosystem. Stablecoin rules there can influence how on-chain settlement grows in Asia, especially for won pairs and regional payment corridors.
A banks-first rule can also become a template. It mirrors a broader regulatory instinct that stablecoins should start in institutions that already live inside bank supervision, then expand outward only after the market proves it can hold redemptions and manage operational risks. The Bank of Korea has previously framed won stablecoins as a balance between innovation and trust, highlighting design issues like governance, redemption assurance, and systemic spillovers in its own research work on won stablecoins.
For crypto markets, the immediate relevance is access and distribution. Issuer eligibility determines which entities can build the primary liquidity pools, negotiate exchange listings, and define compliance standards for on-chain won settlement.
South Korean lawmakers have been debating the next phase of digital asset legislation that includes stablecoins, and issuer eligibility is one of the core contested points. Market watchers will focus on whether draft provisions specify who can issue, what reserve assets qualify, how redemption at par is enforced, and what inspection powers regulators have.
The timeline also matters. If the framework launches with a narrow bank-only window, expect pilots and consortium structures to appear first, with non-bank participation pushed into later phases. If lawmakers widen eligibility earlier, the debate will shift to reserve requirements, segregation, audit cadence, and cross-border controls.
One downstream indicator is exchange policy. If regulators tighten stablecoin rules, domestic venues may adjust listing and deposit requirements for won-referenced tokens, especially around proof of reserves and issuer disclosures.
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