Dr. Sangmin Seo, chair of the Kaia DLT Foundation, argues that the Bank of Korea’s initiative for the banking sector to spearhead the launch of won-denominated stablecoins lacks rationale.
In a report released on Monday, the central bank indicated that banks are already governed by rigorous regulations—including capital, foreign exchange, and Anti-Money Laundering standards—that could mitigate risks related to introducing stablecoins in the nation.
Concurrently, the BOK seeks to establish a policy consultative body consisting of currency, foreign exchange, and financial authorities to determine the eligibility of issuers, volumes, and other critical factors.
Seo conveyed to Cointelegraph that although the central bank’s concerns regarding the risks of stablecoins are valid, the rationale for having banks lead the rollout “appears to lack a sound basis.”
Clear rules for all is a better way forward: Seo
Seo suggested that a more effective approach would be to create clear regulations for stablecoin issuers that could “minimize monetary risks and encourage innovation.”
This framework would allow both banking and non-banking institutions that fulfill these standards to “compete and exhibit their strengths.”
“It would be even more valuable if the Bank of Korea could provide guidelines on how these risks can be mitigated and what qualifications are necessary for an issuer to be considered trustworthy.”
In June, BOK deputy governor Ryoo Sangdai advocated for South Korean banks to serve as the primary providers of stablecoins in the country to ensure a safety net, before gradually extending to other sectors.
Stablecoin yield ban on the table too
The BOK is also considering a ban on interest payments on stablecoins, positing that it may directly compete with bank deposits and disrupt the sector, and has instead proposed the commercialization of deposit tokens, which are digital tokens representing deposits in a bank or financial institution.
Seo remarked that a total prohibition on stablecoin yield would be an excessive measure and could hinder and restrict adoption.
“While I concur that stablecoins should not possess yield-bearing features, I believe it would be unreasonable to limit the potential for generating additional yield through stablecoins,” he stated.
“Restricting this would significantly curtail their utility and adoption; hence, I advocate for permitting additional yield creation.”
South Korea’s stablecoin market heating up
At least eight prominent South Korean banks announced intentions in June to introduce a stablecoin tied to the South Korean won, with expected launches in late 2025 and early 2026.
Related: South Korea caps crypto lending rates at 20%, bans leveraged loans
Simultaneously, Naver Financial, the fintech subsidiary of South Korean tech giant Naver, is reportedly advancing with a plan to acquire Dunamu, which runs the country’s largest cryptocurrency exchange, Upbit, and intends to initiate a Korean won-backed stablecoin project post-acquisition.
The crypto landscape in South Korea has experienced a more favorable climate following President Lee Jae-myung’s election in June, who has since advocated for various crypto-related legislations, including a bill to legitimize stablecoins.
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