The governor of South Korea’s central bank has reportedly stated that he is not opposed to the idea of issuing a stablecoin pegged to the Korean won. However, he expressed concerns about the potential impact such a move could have on the country’s foreign exchange management.
According to a Wednesday report by Reuters, Bank of Korea Governor Rhee Chang-yong said during a press conference that “issuing a won-based stablecoin could make it easier to exchange with dollar-based stablecoins, rather than reducing reliance on them.”
“This could, in turn, drive up demand for dollar stablecoins and complicate our efforts to manage foreign exchange,” he added.
Rhee’s remarks come as newly elected President Lee Jae-myung pushes forward with plans to regulate the crypto industry—one of his key campaign promises—while South Korea grapples with shrinking foreign exchange reserves.
As of the end of May, South Korea’s foreign exchange reserves had declined to $404.6 billion, down from $415.6 billion at the end of December—a drop of $11 billion over six months, according to data from the Bank of Korea.
Friendly regulatory environment
On June 10, President Lee’s ruling Democratic Party introduced the Digital Asset Basic Act, a proposed law that would permit companies with at least $368,000 in equity capital to issue stablecoins.
Under the legislation, issuers would be required to maintain adequate reserves to ensure the ability to process refunds and must obtain approval from the Financial Services Commission (FSC), South Korea’s financial regulator.
The FSC is also investigating local crypto exchanges over their transaction fee structures, aligning with President Lee’s campaign pledge to reduce trading costs and attract younger investors.
Stablecoin backed by a currency other than the US dollar
US dollar-backed tokens continue to dominate the stablecoin market, with Tether (USDT) leading at a market capitalization of $156 billion, followed by Circle’s USDC at $61 billion, according to DefiLlama.
Meanwhile, Circle’s euro-pegged stablecoin, EURC, is gaining momentum, with its market cap surging to $203 million—a 156% increase since the beginning of the year.
Circle’s stock also saw significant gains on Wednesday after U.S. lawmakers indicated they are likely to approve the stablecoin-focused GENIUS Act in the House.
