Bank of Korea Governor Rhee Chang-yong has expressed opinions on the issuance of a won-based stablecoin and the associated risks of managing foreign reserves.
Concern Over Forex Reserves
Rhee Chang-yong stated that while he is not against the proposed issuance of a won-based stablecoin, there exists concern regarding foreign reserve management. He noted that "issuing a won-based stablecoin could make it easier to exchange them with dollar stablecoins rather than reducing their use." This, he added, could increase demand for dollar stablecoins and complicate forex management.
Regulatory Challenges
Newly elected President Lee Jae-myung continues to advance crypto regulation initiatives as promised during his campaign. By the end of May, South Korea's forex reserves had decreased from $415.6 billion to $404.6 billion, marking an $11 billion reduction over six months. This context places new regulations as a priority.
Stablecoin Market Overview
Currently, dollar-backed stablecoins dominate the market. The largest is Tether (USDT) with a market capitalization of $156 billion, followed by Circle’s USDC at $61 billion. Meanwhile, Circle’s euro-pegged stablecoin, EURC, is showing growth, with a current market cap of $203 million, reflecting a 156% increase from the start of the year.
The Governor of the Bank of Korea has expressed concern over the issuance of a won-based stablecoin and its potential impact on the country's foreign reserves. Regulation of this area remains a key issue for the new government.
