South Korean central bank calls for regulation over the issuance of stablecoins pegged to the won.
South Korea Wants to Take the Reins on Won-Based Stablecoins
The Bank of Korea (BOK), South Korea's central bank, is ready to step up and regulate won-based stablecoins, aiming to prevent potential disruption to monetary policy if these digital currencies are treated like legal tender.
According to BusinessKorea, a senior BOK official announced that the central authorities should be involved from the get-go if South Korea allows the issuance of won-backed stablecoins. The official expressed concerns that treating these digital assets like legal tender could complicated monetary policy operations. They also cited the need for the BOK's involvement in the approval process, similar to the Federal Reserve's role in related US legislation.
Koh Kyung-chul, leader of the BOK's electronic finance team, previously voiced concerns regarding stablecoins’ potential influence over South Korea's monetary policy, financial stability, and payments and settlements. He underlined the necessity of the central bank holding "substantial legal authority" at the authorization stage to approve stablecoin issuers.
Back in May, Min Byung-duk, a Democratic Party lawmaker, revealed that around 47.3% of the cryptocurrencies transferred overseas from South Korea's major exchanges in Q1 were dollar-based stablecoins, such as Tether and USDC. Approximately 26.87 trillion won ($40.6 billion) worth of cryptocurrencies were sent abroad, with stablecoins accounting for 56.8 trillion won of the total.
South Korea's stance on won-based stablecoins is not yet defined, as the country's regulatory framework for these digital assets is still in development. Currently, there is no specific legislation authorizing the issuance of won-backed stablecoins. However, discussions are ongoing about their legal status and regulation.
The BOK's push for legal control over won-based stablecoins stems from concerns about their potential impact on monetary policy and financial stability. The central bank stresses the importance of robust frameworks to maintain the stability and integrity of the financial system.
Insights:- As of now, South Korea's regulatory framework for won-based stablecoins is under discussion, with the Bank of Korea eager to play a significant role in regulating them.- The BOK's concerns about won-based stablecoins revolve around their potential impact on monetary policy, financial stability, and payments and settlements.- The central bank emphasizes the importance of maintaining the stability and integrity of the financial system, which requires substantial legal authority to regulate stablecoin issuers.
- The Bank of Korea (BOK) is advocating for substantial legal authority to approve issuers of won-based stablecoins, citing potential influences over monetary policy, financial stability, and payments and settlements.
- In Q1, around 47.3% of the cryptocurrencies transferred overseas from South Korea's major exchanges were dollar-based stablecoins, such as Tether and USDC, accounting for approximately 56.8 trillion won of the total.
- South Korea's regulatory framework for won-based stablecoins is still in development, with no specific legislation currently authorizing their issuance.
- The BOK's involvement in the approval process for won-based stablecoins, similar to the Federal Reserve's role in related US legislation, is essential, as treating these digital assets like legal tender could potentially complicate monetary policy operations.
