tl;dr
South Korea’s central bank, the Bank of Korea (BOK), is advocating for greater regulatory involvement in won-backed stablecoins amid government efforts to promote these digital assets. The BOK proposes a pan-governmental regulatory body with veto power over licensing, challenging a draft bill favori...
South Korea’s central bank, the Bank of Korea (BOK), is pushing for greater involvement in the regulation of won-backed stablecoins as the government increases efforts to launch these digital assets. The BOK has submitted a proposal calling for a pan-governmental regulatory body to oversee the issuance of won-backed stablecoins, similar to the U.S. Stablecoin Certification and Review Committee established under the GENIUS Act. This new body would include multiple financial authorities and potentially give the BOK veto power over licensing decisions, counterbalancing a draft bill that favors jurisdiction by the Financial Services Commission (FSC) with only consultative input from the central bank.
The proposal marks a significant policy shift for the BOK, which had previously opposed won-backed stablecoins but now shows signs of aligning with the pro-digital asset stance of the current administration under President Lee Jae-Myung. The new government, which came into power in June, has championed the development of South Korea as a digital asset hub, making won-backed stablecoins a key component of its agenda. Along with this, the BOK is reconsidering its earlier position of limiting stablecoin issuance to banks; recent statements from Governor Rhee Chang-Yong indicate plans to expand issuance rights to non-bank financial institutions, reflecting growing demands from fintech firms.
Despite these advances, the BOK remains cautious about the broader economic impact, particularly in terms of capital flow management. Governor Rhee expressed concerns that unregulated won-backed stablecoins could facilitate easy transfers to dollar-pegged stablecoins, potentially undermining national financial policies. While other regions such as Europe promote local currency stablecoins to reduce reliance on the U.S. dollar, the BOK fears the opposite effect may occur in South Korea, inadvertently boosting conversions to dollar-denominated tokens.
Meanwhile, South Korean banks and fintech companies are rapidly positioning themselves as leaders in the local stablecoin market. Institutions like Woori Bank, Kakao Bank, Kookmin Bank, and the Industrial Bank of Korea have filed trademarks related to stablecoins, and market reactions have been strong. Stock prices among these banks surged approximately 20% following their trademark applications, with Kakao Bank sharing a notable 19.3% increase the day after its filing.
Turning to Hong Kong, a competitive landscape emerges as over 40 companies vie for fewer than ten available stablecoin issuer licenses under the city’s new Stablecoin Ordinance, which takes effect on August 1. The Hong Kong Monetary Authority (HKMA) is spearheading what many consider the world’s most progressive stablecoin regulatory framework. However, Treasury Secretary Christopher Hui has confirmed that only a small number of companies will succeed in securing licenses this year, despite the high level of interest, setting the stage for fierce competition in this burgeoning sector.