What happened?
South Korea’s central bank warned that won-pegged stablecoins issued by private firms could threaten monetary stability if safeguards aren’t put in place. The Bank of Korea urged that only regulated financial institutions—preferably banks—should issue such assets and recommended reserve audits, issuance caps and central oversight. The warning comes as lawmakers debate bills to legalize stablecoins and a consortium of major banks is preparing pilot models, leaving regulators and politicians at odds.
Who does this affect?
This affects crypto firms, fintech and big tech companies that might want to issue won-linked stablecoins, since the BOK opposes non-bank issuers. It also impacts commercial banks putting together joint stablecoin projects, plus investors and users who could face depegging or redemption risk. Regulators, exchanges and AML authorities are affected too, because new oversight and compliance rules will be needed.
Why does this matter?
Mismanaged or widely issued won-stablecoins could cause depegging, spur capital outflows and weaken the central bank’s control over rates and the won, creating market volatility. That could drain liquidity from Korea’s crypto markets, push retail money into equities or foreign stablecoins, and raise systemic risks for banks and payment systems. Clear rules that favor bank issuance or strict oversight will shape competition, determine whether dollar-backed stablecoins dominate, and influence investor confidence and capital flows.