The Bank of Korea has raised the need for strong regulation of stablecoins issued based on the Korean won, stating that the central bank should be substantially involved from the authorization stage.
According to the Bank of Korea on the 12th, Go Gyeong-cheol, the Electronic Financial Team Leader, argued this at the Korean Financial Law Association Academic Conference held on the 9th at the Bank of Korea annex, presenting on the topic of 'Stablecoin Trends and Future Tasks'. The team leader pointed out that stablecoins have significant implications for the central bank's core policy implementation in monetary policy, financial stability, and payment settlements, emphasizing that "entry regulations for issuers should be strengthened, and substantial legal authority should be granted to the central bank at the authorization stage".
Stablecoins are cryptocurrencies issued based on the value of existing currencies like the US dollar or Korean won, which are already traded in various forms in the global market. However, won-based stablecoins are not yet legally permitted in Korea. The Bank of Korea believes that if such stablecoins become active, they could erode demand for legal tender, undermine the effectiveness of monetary policy, and negatively impact financial market stability.
The team leader specifically stated that "the central bank should minimize negative policy impacts by substantially intervening at the authorization stage" and that "it is necessary to establish a stable and sustainable digital payment ecosystem from the legislative design stage". This is interpreted as a statement considering the overall digital payment system ecosystem in the long term, along with the central bank digital currency (CBDC) and deposit tokens currently being pursued.
Meanwhile, the Bank of Korea had previously expressed strong concerns about stablecoins in the 'Payment Settlement Report' released last month. The report noted that "stablecoins can infringe on monetary sovereignty and weaken monetary policy effectiveness" and that "if large-scale sell-offs occur due to external shocks, related risks could spread to traditional financial markets, posing a serious threat to payment settlement system stability". Accordingly, it emphasized that "a very cautious approach is required when preparing introduction and regulatory measures".
As global discussions about stablecoins expand, the industry is focusing on the Bank of Korea's proactive efforts to strengthen its role as a regulatory body, emphasizing monetary sovereignty and financial stability.
