A senior official from the Bank of Korea (BOK) stated that the country should allow banks to issue stablecoins first, then gradually expand authority to non-bank sectors. This move aims to create a "safety net" and mitigate risks as the country develops cryptocurrency policies.

Concerns about capital outflows and proposed controls

Deputy Governor of the Bank of Korea, Ryoo Sang-dai, conveyed this message during a meeting with leaders of major commercial banks at the central bank's headquarters in Seoul. Mr. Ryoo emphasized, "It would be desirable to initially allow the issuance of stablecoins mainly through banks, which are subject to a higher level of financial regulation, and gradually expand into the non-bank sector."

This approach comes as South Korea grapples with strong growth in digital asset trading. Trading surged from $12.9 billion (17.59 trillion won) in Q3 2024 to $42.4 billion (57.9 trillion won) in Q1 2025. Nearly half of the digital assets transferred abroad in Q1 2025 – worth $19.5 billion – were #stablecoin , raising concerns about capital outflows that could threaten the nation's monetary sovereignty. Mr. Sang-dai stated, "The goal is to establish a safety net, considering the potential for market disruption or harm to consumers."

Cryptocurrency policy under President Lee Jae-myung

The Deputy Governor warned that stablecoins, while offering potential for innovation, could "alter the fundamental stance we have maintained regarding foreign exchange liberalization and the internationalization of the Korean won." He also raised concerns about potential market disruption, financial instability, and the need to consider models like "narrow banking," where institutions only provide payment services without lending.

The Governor of the Bank of Korea, Rhee Chang-yong, has also signaled support for stablecoins while calling for caution. President Lee Jae-myung, who took office this month after a snap election, has prioritized regulations on stablecoins. His administration has introduced the Basic Act on Digital Assets, allowing domestic companies with at least $366,749 (500 million won) in capital to issue stablecoins backed by the won.

The Bank of Korea is also exploring a hybrid model where their planned deposit tokens could coexist with private sector stablecoins on public blockchains. However, some industry experts remain skeptical. #Korea