Risks from South Korean Won Stablecoin Project: Increasing USD Demand?
Bank of Korea Governor Rhee Chang-yong has expressed concerns about the initial testing of stablecoins pegged to the won. He warned that these cryptocurrencies could add to demand pressure on the U.S. dollar, which could make the central bank’s foreign exchange policy more difficult to control. Promoting domestic stablecoins could inadvertently increase the exchange rate between the U.S. dollar and the won, driving up demand for the cryptocurrency.
Won Stablecoin: Can't Reduce USD Demand, But Can Boost Exchange
During the press conference, Rhee clarified that issuing a won stablecoin would not necessarily reduce the demand for USD stablecoins. Instead, it would facilitate easier foreign exchange operations. This means that the policy could inadvertently increase the amount of USD cryptocurrencies traded, making it more difficult to control the country's foreign exchange market.
South Korea's Cryptocurrency Policy: Challenges and Opportunities
The new administration of President Lee Jae-myung supports the won-backed stablecoin project to stem capital outflows. The proposed Digital Asset Basic Act has paved the way for domestic companies to issue won-backed stablecoins, creating huge opportunities for fintech companies and cryptocurrency investors. Kim Yong-beom, a former CEO of crypto companies, has been appointed to promote this policy, clarifying the government's intention to expand the domestic stablecoin ecosystem.
Current status and potential of won stablecoins
Rhee confirmed that he is not against issuing a won-backed stablecoin, but stressed that the impact on the monetary system depends on the issuance method and collateral. Allowing non-bank institutions to issue cryptocurrencies tied to the won could undermine national monetary policy. Commercial banks have yet to see clear profits from this activity, but the emergence of a domestic stablecoin could change the market landscape.
Won Stablecoin: Vietnam Market and Current Situation in Korea
In Q1 2025, the value of stablecoins in South Korea reached 56.95 trillion won, a three-fold increase from Q3 2024. Experts warn that the issuance of stablecoins could increase money supply, directly affecting the rate and value of the won. This also raises concerns about the country's financial security and macroeconomic stability, especially in the context of continued cross-border transactions.
South Korea's Policy Pushes for Stablecoin Law Under New Administration
President Lee Jae-myung has pushed for the Digital Asset Basic Act to issue domestic stablecoins. The law requires issuers to hold at least 500 million won in capital, maintain reasonable reserves, and be approved by the Financial Services Commission (FSC). However, Governor Rhee warned that private stablecoins could reduce the central bank's control over monetary policy.
The Expansion Potential of the Cryptocurrency Market in South Korea
The government plans to work closely with the Ministry of Economy and Finance, and the FSC, to develop a suitable legal framework to promote cryptocurrency activities and protect consumers. Proposals include privatizing the Bitcoin sector and allowing pension funds to invest directly in Bitcoin, along with Bitcoin ETFs — opening up new opportunities for the domestic crypto market.
“We need to consider the broader implications for bank profitability and structural changes when expanding payments and settlement functions to the non-bank sector.”
–Rhee Chang-yong, Governor of the Bank of Korea (BoK)
The central bank emphasized its leading role in regulating the issuance of domestic stablecoins, and established a crypto policy committee to ensure a comprehensive and practical legal framework. The ultimate goal is to promote the development of cryptocurrencies while protecting the national financial system from potential risks.
Source: https://tintucbitcoin.com/ngan-hang-han-quoc-stablecoin-de-doa-phi-usd/
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