Stablecoin Plan in South Korea Starts With Bank Issuance

South Korea is preparing to roll out won-backed stablecoins through a phased strategy that begins with commercial banks, according to a report from Reuters. The approach reflects the country’s cautious stance on digital assets while aiming to keep pace with financial innovation.

Good to know

• Initial stablecoin issuers will be commercial banks, not private fintechs.
• The plan ties in with President Lee Jae Myung’s campaign promise.
• Bank of Korea will launch a second CBDC pilot with local banks soon.

According to Ryoo Sang-dai, senior deputy governor at the Bank of Korea (BOK), the plan is to begin with banks due to their stricter oversight. “It is desirable to first allow banks, which are under a high level of regulations, to issue (won-based stablecoins) and gradually expand to the non-bank sector with the experience,” Ryoo said.

The central bank believes this strategy will help contain risks to monetary policy and financial stability as the country introduces new forms of digital assets.

Stablecoin Policy in Line With Presidential Agenda

President Lee Jae Myung has voiced support for stablecoins since his election campaign. His administration, along with the Democratic Party, is now working on legislation to support won-based stablecoin issuance. The goal is to ensure South Korea remains competitive in the global digital finance space while avoiding regulatory gaps.

Authorities are focused on balancing innovation with control, particularly when it comes to how digital currencies might affect capital flows, interest rates, and payment systems.

Alongside stablecoin plans, the Bank of Korea is also continuing its exploration of a central bank digital currency (CBDC). A second pilot program is being prepared, with commercial banks expected to play a central role.

The current pilot, run jointly with the Bank for International Settlements, is nearing completion. It began in late 2023 and will officially wrap up next week.

Ryoo noted that the second phase would be shaped by policy direction from the new administration, and further input from the banking sector will guide how the CBDC develops moving forward.

Beyond stablecoins and CBDCs, Ryoo also said the government would speed up currency market reforms. These efforts include extending trading hours and encouraging foreign investor participation, all part of a broader plan to modernize South Korea’s financial infrastructure.