South Korea Eyes Domestic Crypto Issuance as Governor Warns on Stablecoin Risks – What’s the Plan?
Bank of Korea Governor Rhee Chang-yong revealed South Korea is contemplating a brand new registration regime that will enable home establishments to subject digital belongings, whereas warning that won-denominated stablecoins might allow capital circulation circumvention.
Speaking at the Asian Financial Forum in Hong Kong, Rhee emphasised that alternate price volatility might set off speedy shifts into USD stablecoins and enormous fund transfers.
The announcement comes as South Korean regulators stay deadlocked over complete stablecoin governance, with the Financial Services Commission and Bank of Korea cut up on whether or not issuance ought to be restricted to bank-led consortia.
Meanwhile, the won has faced mounting pressure from currency swings and Trump’s tariff threats, which pushed the alternate price to 1,446.2 gained per greenback on Monday.
Governor Flags Capital Control Concerns Over Stablecoin Launch
Rhee careworn that when launched, won-denominated stablecoins “may be used to bypass capital circulation management measures, particularly when mixed with US greenback stablecoins.”
He famous that USD stablecoins are extensively used and available, with transaction prices far decrease than utilizing {dollars} straight.
The governor warned that when alternate price fluctuations set off market expectations, funds might circulation quickly into greenback stablecoins, resulting in large-scale money transfers.
He added that non-bank issuance of stablecoins makes regulation significantly tough for authorities.
Despite these issues, Rhee acknowledged that market strain has compelled authorities to permit South Korean residents to put money into overseas-issued digital belongings.
He defined that won-denominated stablecoins would primarily serve cross-border transactions, whereas tokenized deposits would deal with extra home funds.
Won Under Pressure as Trump Tariff Threat Compounds Volatility
The won-dollar price closed at 1,446.2 gained on Monday, rising 5.6 gained after President Donald Trump threatened to extend tariffs on Korean vehicles, lumber, and prescription drugs to 25% from 15%.
Trump posted on Truth Social that the “South Korean’s legislature isn’t residing as much as its cope with the United States,” saying the tariff hike in response.
However, the forex’s losses proved restricted as South Korea’s National Pension Service lowered its end-2026 overseas inventory goal to 37.2% from 38.9%, strengthening the gained by as a lot as 2% to 1,433.3 per greenback following the announcement.
The welfare ministry mentioned greenback demand was rising with the pension fund’s rising dimension, whereas greenback provide in the onshore overseas alternate market was being outweighed by demand.
The KOSPI additionally rallied 2.73% to shut at 5,084.85 on Tuesday regardless of Trump’s tariff risk, as buyers purchased the dip following Samsung Electronics’ 4.87% achieve and SK Hynix’s 8.70% surge to a document high.
Min Kyung-won, a Woori Bank researcher, instructed the ChosunBiz that Trump’s assertion “acts as a bearish issue for the gained,” however added that the risk of coordinated market intervention by US and Japanese overseas alternate authorities helps the forex’s higher vary.
Regulatory Deadlock Stalls Stablecoin Framework Despite Market Momentum
The Bank of Korea has pushed for stablecoins to be issued only by consortia controlled by banks, insisting that lenders maintain a minimum of a 51% possession stake to guard financial stability.
The Financial Services Commission has resisted setting a set possession threshold, warning it might sideline expertise companies and sluggish innovation in digital funds.
Rhee emphasised at the Hong Kong discussion board that digital finance regulation ought to be strengthened, not relaxed, cautioning in opposition to forgetting the prices of the 2008 monetary disaster.
He argued that South Korea’s quick fee system is very developed and retail CBDCs don’t supply vital benefits, although the central financial institution is conducting pilot tasks with tokenized deposits and wholesale CBDCs.
South Korea’s complete crypto regulation has been delayed to 2026 attributable to a dispute over who ought to be allowed to subject stablecoins.#Crypto #Regulationhttps://t.co/jKP9L9n63S
— Cryptonews.com (@cryptonews) December 30, 2025
The regulatory deadlock persists regardless of sturdy market momentum, as South Korea ended its nine-year corporate crypto trading ban this month and passed amendments to the Capital Markets Act establishing authorized frameworks for tokenized securities buying and selling starting January 2027.
Back in October, the Solana Foundation partnered with Wavebridge to develop a KRW-pegged stablecoin, whereas BDACS additionally launched KRW1 on Avalanche in September, with each token backed 1:1 by gained held in escrow at Woori Bank.
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