Bank of Korea sounds alarm over unregulated stablecoins
South Korea’s central bank has warned that allowing multiple stablecoin issuers could create economic chaos without clear oversight.
Bank of Korea Governor Lee Chang-yong warned that letting non-banks issue won-based stablecoins could spark economic confusion similar to the 19th-century US Free Banking Era. His remarks follow President Lee Jae Myung’s push to launch domestic stablecoins under his economic agenda.
Governor Lee noted that handing over payment and settlement services to non-banks might disrupt the profit models of traditional banks and conflict with foreign exchange policies. He stressed that stablecoin policy requires coordination across government, as the central bank lacks sole authority.
Meanwhile, President Lee’s support for stablecoins has sparked a flurry of activity among fintech and banking firms, with many filing trademark applications linked to KRW stablecoin symbols. KakaoPay, one of South Korea’s largest payment platforms, has seen its stock surge by more than 120% since Lee’s election.
The BOK recently announced it will pause its central bank digital currency (CBDC) pilot, citing legal uncertainty surrounding the coexistence of CBDCs, stablecoins, and deposit tokens. Lee stated the trial had considered stablecoin interaction from the beginning, and further action will depend on legislative developments.
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