The risks of stablecoins linked to the South Korean won: the opinion of the head of the Bank of Korea
Date: 2025-06-20 Author: Henry Casey Categories: CRYPTO PAYMENTS, IN WORLD
According to him, such tokens will not reduce the use of dollar stablecoins, but, on the contrary, may contribute to their growth, facilitating the exchange between different cryptoassets. In addition, an increase in the issue of stablecoins can expand the money supply and weaken its position in the financial market, which requires a careful approach.
These concerns run counter to the program of the new president of South Korea, Lee Jae Myung, who supports the development of local stablecoins nominated in them. The main goal of the initiative is to retain capital within the country and reduce the outflow of funds abroad. In support of this strategy, the ruling Democratic Party proposed a bill regulating the activities of companies that issue such digital assets. The document provides for increasing transparency and stimulating healthy competition on the crypto market.
According to the bill, South Korean companies will be able to issue stablecoins only if they have an authorized capital of at least 500 million won (approximately $365,500). Issuers are also required to have sufficient reserves and obtain permission from the Financial Services Commission of South Korea (FSC). The country is witnessing a significant increase in trading volumes of stablecoins — in the first quarter of 2025, the amount of transactions on the five largest crypto exchanges in South Korea (Upbit, Bithumb, Korbit, Coinone and Gopax) reached 57 trillion won ($41.6 billion).
Ri Chang-yong noted that he is not categorically against the launch of such digital currencies, since their impact on the financial system depends on the emission model and the type of supporting assets. However, he expressed doubts that granting non-banking organizations complete freedom in the issue of stablecoins will not lead to a weakening of the central bank's control over the monetary system.
Earlier, the head of the Bank of Korea already spoke out against stablecoins, emphasizing that it is preferable to introduce a central bank digital currency (CBDC), which could be used in both retail and wholesale settlements. Such a currency will preserve monetary control and increase the efficiency of the payment system in the country.
Thus, despite the support of the government, the bank regulator calls for caution in the development of the stablecoin market with reference to it, taking into account the possible risks to the economy and the stability of the national currency.
