The Bank of Korea (BOK) raises issues about launching stablecoins tied to the Korean won, expressing concerns regarding the impact on the usage of dollar-based stablecoins.
Central Bank Warns About Dollar Risks
During a press briefing on Wednesday, Bank of Korea Governor Lee Chang-yong shared his worries. He explained that creating won-based stablecoins may lead to increased exchanges between won and dollar stablecoins. According to Lee, this move might not reduce the use of U.S. dollar stablecoins as expected. Instead, it could facilitate users switching between won and dollar stablecoins, leading to a greater reliance on the U.S. dollar in digital transactions. He warned that this trend would complicate the central bank's oversight of foreign exchange movements.
Government Support for Stablecoins to Protect Economy
President Lee Jae Myung, who recently took office, has expressed support for launching a won-backed stablecoin. His aim is to stop capital from leaving the country and modernize Korea’s financial system for the digital age. However, his plan now faces skepticism from the central bank, which is urging a more careful approach. Still, Governor Lee clarified that the Bank of Korea is not entirely against the idea. Despite the central bank’s concerns, he mentioned that the bank wants clear rules and safety measures to be in place. To address these concerns, the Ministry of Economy and Finance and the Financial Services Commission will join the central bank in discussing stablecoin policies.
Global Stablecoin Market Grows Amid New Rules
The global stablecoin market is growing rapidly, with a total value exceeding 261 billion dollars. Most of this is derived from U.S. dollar-pegged stablecoins, which comprise over 253 billion dollars. With the recent passing of the GENIUS Act in the Senate, the U.S. is also moving quickly to establish clear regulations for these digital assets.
The Bank of Korea expresses serious concerns regarding the potential risks associated with the launch of won-linked stablecoins. The need for establishing clear regulations and ensuring safe use of stablecoins becomes increasingly important amidst the growing interest in this market.
