Kaia Executive Questions the Logic Behind Korea’s Bank-Driven Stablecoin Launch

Dr. Sangmin Seo, chair of the Kaia DLT Foundation, critiqued the Bank of Korea’s initiative for the banking sector to spearhead the launch of won-denominated stablecoins as illogical.

In a report released on Monday, the central bank expressed that banks already face stringent regulations, including capital, foreign exchange, and Anti-Money Laundering rules, which could mitigate the risks tied to introducing stablecoins in the country.

Simultaneously, the BOK seeks a policy consultative body formed by currency, foreign exchange, and financial authorities to determine issuer eligibility, volumes, and other vital factors.

Seo remarked to Cointelegraph that, although the central bank’s concerns over stablecoin risks are valid, its push for banks to lead the rollout “appears to lack a logical basis.”

Clear regulations for all as a better approach: Seo

Seo suggested that establishing clear rules for stablecoin issuers could “minimize monetary risks and encourage innovation.”

This would enable both banking and non-banking entities that fulfill these criteria to “compete and showcase their strengths.”

“It would be even more beneficial if the Bank of Korea could outline how to mitigate these risks and the qualifications necessary for an issuer to be deemed trustworthy.”

In June, BOK deputy governor Ryoo Sangdai recommended South Korean banks serve as the primary issuers of stablecoins in the country to provide a safety net before gradually integrating other sectors.

Discussion on stablecoin yield ban

The BOK is also advocating for a prohibition on interest payments on stablecoins, asserting that it could directly compete with bank deposits and disrupt the sector, instead proposing the commercialization of deposit tokens—digital tokens that represent bank deposits—for pursuit.