The Bank of Korea Advocates for Bank-Led Stablecoin Issuance
- The Bank of Korea advises banks to lead stablecoin issuance.
- Institutional trust is emphasized for monetary stability.
- Potential shift in stablecoin market dynamics.
The Bank of Korea has issued a warning on October 29, 2025, about private stablecoin issuers, emphasizing the need for bank-led issuance and enhanced safeguards for won-pegged currencies.
This announcement impacts stablecoin market dynamics in South Korea, shifting influence from private tech firms to institutional banks, while addressing potential risks in cryptocurrency trust and stability.
The Bank of Korea (BOK) has released a report advocating for bank-led stablecoin issuance. The BOK warns that private issuers lack the institutional trust required to maintain a stable currency.
Legal Frameworks and Market Implications
The BOK’s stance affects legal frameworks for stablecoins in Korea. Proposed legislation highlights the need for banks to back stablecoin activities, shifting financial attention to regulated entities. Market implications are significant as stablecoin initiatives gravitate towards bank-backed models. Historical precedents, such as Terra/LUNA and USDC crises, underscore the need for stability.
Transition to Bank-Backed Models
Korean banks like Woori Bank are already piloting compliant stablecoins, signaling a shift from private tech firms. The first fully compliant won-backed stablecoin, KRW1, emphasizes this transition.
“Currency functions on trust, not technology. Stablecoin initiatives must be anchored in a bank-led consortium model to assure reliability and public confidence.” — Rhee Chang-yong, Governor, Bank of Korea
Future outcomes may include reduced innovation in non-regulated stablecoin projects. The BOK strongly advocates for regulated bank participation to secure stablecoin reliability.
