South Korea’s central bank won’t oppose stablecoin: Report

South Korea’s central bank, the Bank of Korea (BOK), has indicated that it will not oppose the issuance of a won-backed stablecoin, signaling a notable shift toward embracing digital currency innovation. Governor Rhee Chang-yong stated that he supports the creation of won-denominated stablecoins but expressed concerns about the potential challenges in managing foreign exchange. Specifically, he warned that issuing won-based stablecoins could facilitate easier exchange with U.S. dollar stablecoins, potentially increasing demand for dollar stablecoins and complicating the central bank’s foreign exchange management efforts.

This stance aligns with the broader regulatory developments in South Korea, where the ruling Democratic Party introduced the Digital Asset Basic Act. The legislation allows companies with a minimum equity capital of approximately $368,000 to issue stablecoins, provided they maintain sufficient reserves to guarantee redemption and obtain approval from the Financial Services Commission (FSC), the country’s financial regulator. The FSC holds primary supervisory authority over stablecoin issuers, although the Bank of Korea has been granted a consultative role, including the ability to request data and inspections related to stablecoin issuers.

While the central bank is open to the idea of won-pegged stablecoins, it remains cautious about the risks to the financial system, including potential disruptions to the banking sector and the challenges posed by capital flow management. These concerns reflect the Bank of Korea’s intent to supervise and regulate stablecoin issuance carefully to balance innovation with financial stability.

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