The Bank of Korea’s plan to have traditional banks lead the launch of won-backed stablecoins is misguided, according to Dr. Sangmin Seo, chair of the Kaia DLT Foundation.
In a report published Monday, the central bank said banks were best positioned to issue stablecoins since they already comply with stringent regulations on capital, foreign exchange, and anti–money laundering — measures that could, in theory, reduce the risks tied to such digital assets.
The BOK also proposed forming a joint policy body composed of monetary, foreign exchange, and financial regulators to determine eligibility criteria for issuers, issuance limits, and other core parameters.
However, Seo told Cointelegraph that while the central bank’s concerns about stablecoin-related risks are valid, its reasoning for assigning banks the lead role “lacks logical grounding.”
A level playing field is the better path, says Seo
Seo suggested that the more effective approach would be to implement clear, consistent rules for all stablecoin issuers — rules designed to “mitigate monetary risks while promoting innovation.”
Such a framework, he added, would enable both banking and non-banking entities that meet regulatory standards to “compete on equal footing and prove their capabilities.”
“It would be even more valuable if the Bank of Korea could provide guidelines on how these risks can be mitigated and what qualifications are required for an issuer to be regarded as trustworthy.”
In June, Bank of Korea Deputy Governor Ryoo Sangdai suggested that domestic banks should serve as the primary issuers of stablecoins to provide a safety net, with potential expansion to other sectors over time.
BOK considers a ban on stablecoin yields
The central bank is also proposing to prohibit interest payments on stablecoins, claiming such features could compete with traditional bank deposits and destabilize the financial system. Instead, it has promoted the idea of developing deposit tokens — digital representations of funds held in banks or financial institutions — as a safer alternative.
However, Seo argued that a blanket ban on stablecoin yields would be overly restrictive and could hinder adoption.
“While I agree that stablecoins themselves shouldn’t carry built-in yield features, it would be excessive to ban users from generating additional yield through their use,” he said.
“Doing so would significantly limit their utility and adoption; therefore, I think allowing supplementary yield creation should be permitted.”
South Korea’s stablecoin race intensifies
At least eight major South Korean banks revealed plans in June to issue stablecoins pegged to the won, with launches expected between late 2025 and early 2026.
Meanwhile, Naver Financial — the fintech subsidiary of tech giant Naver — is reportedly advancing a plan to acquire Dunamu, the operator of Upbit, South Korea’s largest cryptocurrency exchange. Following the acquisition, Naver aims to introduce its own won-backed stablecoin project.
The broader crypto sector in South Korea has gained momentum since the election of President Lee Jae-myung in June. His administration has taken a notably pro-crypto stance, advancing several pieces of legislation, including a bill that would formally legalize stablecoins.
