Won Stablecoin: Korea's Balancing Act Between Innovation and Risk
- Keyword Financial
- Jun 18
- 3 min read
Introduction
The Bank of Korea (BOK) remains cautious about the issuance of a won-pegged stablecoin, even after recent discussions with Circle, the issuer of USD Coin (USDC). While there is growing political and industry interest in launching a stablecoin backed by the Korean won, the central bank has expressed concerns about the potential risks to monetary policy and financial stability. BOK Governor Rhee Chang-yong has stated that although he is not fundamentally opposed to the idea, he worries that such stablecoins could complicate the management of capital flows and increase demand for dollar-based stablecoins, potentially undermining the effectiveness of South Korea’s foreign exchange controls and monetary policy.
The debate over won-backed stablecoins has intensified following the election of President Lee Jae-myung, who has signaled support for digital asset innovation and regulatory reform. The ruling Democratic Party has proposed the Digital Asset Basic Act, which aims to establish a regulatory framework for local companies to issue won-denominated stablecoins. The appointment of Kim Yong-beom, a former crypto executive, as the president’s chief policy officer has further fueled speculation that the government may move forward with stablecoin initiatives. However, the BOK and other regulators remain wary, emphasizing the need for robust legal and regulatory safeguards before any rollout.
Despite mounting pressure from both the private sector and political leaders, the BOK is urging a measured approach. Central bank officials warn that a premature or poorly regulated introduction of won-based stablecoins could pose systemic risks, weaken the status of the Korean won as legal tender, and disrupt the country’s financial system. The BOK plans to host a conference to further discuss the implications and necessary countermeasures, signaling that while stablecoins may be inevitable in the global financial landscape, South Korea will proceed with caution and prioritize financial stability.
