The Bank of Korea’s (BOK) push for the banking sector to lead the rollout of won-denominated stablecoins lacks logic, says Dr. Sangmin Seo, the chair of the Kaia DLT Foundation.
In a report released on Monday, the central bank argued that banks are already subject to strict regulations, including capital, foreign exchange, and Anti-Money Laundering requirements, which could help minimize any risks associated with introducing stablecoins to the country.
At the same time, the BOK wants a policy consultative body jointly made up of currency, foreign exchange, and financial authorities to decide on issuer eligibility, volumes and other key considerations.
Seo told Cointelegraph that while the central banks’ concerns about stablecoin risks are understandable, its argument for banks leading a rollout “seems to lack a logical foundation.”
Clear rules for all is a better way forward: Seo
Seo argued that a better solution would be to establish clear rules for stablecoin issuers that can “minimize monetary risks and foster innovation.”
He said it would also allow both banking and non-banking institutions that meet these criteria to “compete and demonstrate their strengths.”
“It would be even more valuable if the Bank of Korea could provide guidelines on how these risks can be mitigated and what qualifications are required for an issuer to be regarded as trustworthy.”
In June, BOK Deputy Governor Ryoo Sangdai proposed that South Korean banks be the primary issuers of stablecoins in the country to ensure a safety net, before gradually expanding to other sectors.
Stablecoin yield ban on the table too
The BOK also wants to ban interest payments on stablecoins, arguing that it could directly compete with bank deposits and disrupt the sector, and has instead pitched the commercialization of deposit tokens, digital tokens that represent deposits in a bank or financial institution, to be pursued.
Seo said a total ban on stablecoin yield would be an excessive measure and could harm and limit adoption.
“While I agree that stablecoins themselves should not include any yield-bearing features, I believe it would be excessive to restrict the generation of additional yield through the use of stablecoins,” he said.
“Doing so would significantly limit their utility and adoption; therefore, I think allowing supplementary yield creation should be permitted.”
South Korea’s stablecoin market heating up
At least eight major South Korean banks announced plans in June to offer a stablecoin pegged to the South Korean won, with planned launches across late 2025 and early 2026.
Related: South Korea caps crypto lending rates at 20%, bans leveraged loans
Meanwhile, Naver Financial, the fintech arm of South Korean tech conglomerate Naver, is reportedly moving forward with a plan to acquire Dunamu, which operates the country’s largest cryptocurrency exchange, Upbit, and plans to launch a Korean won-backed stablecoin project once the acquisition is complete.
The crypto industry in South Korea has benefited from a more favorable environment following the election of President Lee Jae-myung in June, who has since pushed forward with various crypto-related laws, including a bill to legalize stablecoins.
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