Bank of Korea Demands Banking-Only Won Stablecoin Issuance

The Bank of Korea has intensified its push to restrict won-denominated stablecoin issuance to regulated banks. The central bank submitted a work status report to the National Assembly’s Finance and Economic Planning Committee on the 23rd. The document outlines significant concerns about allowing non-bank entities to issue won stablecoins.

The Bank of Korea is drawing a hard line: Won-denominated stablecoins must be issued by licensed commercial banks.

In a report to Parliament, the BOK argued that only banks have the "regulatory DNA" (including strict capital and compliance standards) are to handle currency-like… pic.twitter.com/M6w4YZmYmB

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Governor Lee Chang-yong previously raised similar warnings at the Asian Financial Forum in Hong Kong. He specifically flagged risks around capital flow controls being circumvented through stablecoin combinations. The central bank now seeks comprehensive legislation addressing monetary policy, foreign exchange stability, and financial system integrity.

South Korea currently faces mounting pressure to open institutional crypto trading channels. Authorities have already permitted residents to invest in overseas-issued virtual assets. Financial regulators are now considering a new registration system for domestic institutional issuance.

Central Bank Flags Foreign Capital Flight Risks

The Bank of Korea’s report delivered sharp criticism of proposals allowing private companies to issue won stablecoins. The central bank warned such arrangements carry high risks of facilitating foreign capital outflows. These transactions could circumvent existing foreign exchange regulations requiring advance reporting.

According to the submitted document, independent issuance by non-banks raises multiple structural concerns. The central bank cited potential conflicts between industrial and financial capital interests. It also flagged violations of Korea’s principle separating money and industry.

Economic power concentration emerged as another key concern in the report. The Bank of Korea suggested unrestricted issuance could trigger significant financial industry restructuring. These changes might destabilize existing regulatory frameworks governing monetary systems.

Governor Lee previously emphasized U.S. dollar stablecoins are widely accessible with lower transaction costs. He noted exchange rate volatility could trigger massive fund inflows into these instruments. Such movements would significantly complicate the central bank’s monetary oversight capabilities.

The report specifically addressed combinations of won-denominated and dollar stablecoins. These pairings could create regulatory loopholes undermining capital control mechanisms. The central bank views this as a critical vulnerability requiring legislative attention.

Banking Consortium Model Gains Traction

The Bank of Korea proposed establishing a banking consortium as the primary safeguard for won stablecoin issuance. The central bank recommends creating a statutory policy organization coordinating efforts between related institutions. This structure would provide oversight and ensure systemic stability.

The report referenced the United States’ regulatory approach as a potential model. Under the U.S. Genius Act, a stablecoin certification review committee oversees issuance approvals. This committee comprises the Treasury Secretary, Federal Reserve Chairman, and Federal Deposit Insurance Corporation Chairman.

RTHK reported that Bank of Korea Governor Rhee Chang-yong, speaking at the Asian Financial Forum in Hong Kong, noted South Korea has allowed residents to invest in overseas-issued virtual assets amid market pressure, while regulators are considering a new registration regime that…

— Wu Blockchain (@WuBlockchain) January 27, 2026

Korean regulators view the banking sector as uniquely qualified for initial stablecoin issuance responsibilities. Banks already operate under high-level regulations covering capital requirements and soundness standards. Their existing governance structures and regulatory compliance capabilities provide necessary safeguards.

The central bank envisions a phased expansion approach following successful banking sector implementation. Non-financial companies could eventually participate after thorough risk assessments. This gradual rollout would allow regulators to monitor impacts before broadening market access.

Meanwhile, the Bank of Korea acknowledged potential benefits from won stablecoin adoption. The report recognized programmable currencies through smart contracts could enhance digital payment systems. Such instruments might contribute to revitalizing Korea’s digital asset industry.

The central bank also noted stablecoins could serve effectively as payment methods within digital platform environments. However, these benefits must be balanced against macroeconomic stability considerations. The Bank of Korea maintains that industrial development cannot supersede monetary policy integrity.

South Korean authorities continue preparing broader crypto market reforms alongside stablecoin discussions. Institutional crypto trading represents the next major policy frontier. The regulatory framework for won stablecoins will likely influence these parallel developments significantly.