South Korea’s central bank has officially launched a dedicated Cryptoasset Department to oversee the development and regulation of won-based stablecoins, marking a significant institutional step toward integrating digital currencies into the nation’s financial system. Housed within the Bank of Korea’s Financial Settlement Bureau, the new department is tasked with coordinating policy, legislation, and oversight efforts tied to stablecoin issuance and usage.
According to official statements, the bank is particularly concerned about maintaining capital flow stability and protecting foreign exchange controls, especially in the face of increasing interest in dollar-pegged alternatives. “We are not against won-based stablecoins in principle,” Bank of Korea Governor Rhee Chang-yong stated, “but their potential to disrupt foreign exchange management requires cautious, phased deployment.”
Policy Clash with Lawmakers Intensifies
Tensions have risen between the Bank of Korea and South Korean lawmakers over who should control stablecoin issuance and oversight. Legislators from the ruling Democratic Party have introduced bills allowing private entities with at least 500 million won (approximately $360,000 USD) in equity to issue stablecoins. This legislative push aims to promote innovation and reduce reliance on dollar-based tokens.
However, central bank officials argue that unrestricted private issuance could echo the instability of the free banking era. Instead, the bank advocates for limiting issuance rights to regulated commercial banks, under a phased and tightly controlled rollout.
Deputy Governor Ryoo Sang-dai supports a model where stablecoin issuance is initially confined to traditional banking institutions. He warned against fast-tracking legislation that could lead to systemic risk, suggesting instead a multi-agency policy body with veto rights for the central bank.
Bank Consortium Prepares for Rollout
A consortium of eight major South Korean banks—including KB Kookmin, Shinhan, Woori, Nonghyup, Citi Korea, and others—is reportedly preparing to launch a won-denominated stablecoin by late 2025 or early 2026. These institutions are evaluating both trust-based and deposit-token issuance models, in line with the Bank of Korea’s preference for institution-led development.
This rollout coincides with the central bank’s broader vision of reducing dollar dominance in domestic crypto markets, while safeguarding the nation’s monetary policy. By anchoring stablecoin development within the traditional banking system, the Bank of Korea aims to foster innovation without compromising financial stability.
As the battle for regulatory control continues, South Korea is emerging as a crucial testing ground for how traditional financial institutions and digital innovation can coexist in the stablecoin era.
