South Korea’s central bank governor has warned that won-denominated stablecoins could complicate capital flow management, injecting caution into an ongoing legislative debate over whether and how domestic stablecoins should be issued, according to local media.
Speaking at the Asian Financial Forum in Hong Kong, Bank of Korea Governor Lee Chang-yong said authorities are considering a registration framework that would allow domestic institutions to issue virtual assets, Radio Television Hong Kong reported. However, he stressed that stablecoins remain controversial due to their potential impact on foreign exchange stability.
Lee said won-pegged stablecoins would likely be used primarily for cross-border transactions and cautioned that, when used alongside US dollar stablecoins, they could be exploited to circumvent capital flow controls during periods of market volatility.
His remarks add the central bank’s perspective to a broader policy standoff, as South Korean lawmakers seek to formalize digital asset issuance without weakening financial oversight. While the country has signaled openness to regulated crypto activity, officials remain wary of structures that could undermine existing foreign exchange controls.
Lawmakers split on stablecoin issuance and oversight
Disagreements over stablecoin regulation have slowed progress on South Korea’s proposed Digital Asset Basic Act, often described as the second phase of the country’s virtual asset regulatory framework.
According to a Sunday report by Chosun Ilbo, submission of the bill to the National Assembly has been delayed amid disputes over stablecoin issuance rules, ownership limits for exchanges and regulatory jurisdiction.
A key point of contention is who should be permitted to issue won-pegged stablecoins. The central bank has argued issuance should be led primarily by banks to reduce systemic and foreign exchange risks. Industry groups, however, have pushed for a broader authorization regime that would allow non-bank firms to participate under regulatory supervision.
Financial authorities have reportedly explored compromise models involving bank-led consortiums, but negotiations have stalled. The legislative impasse has also delayed discussions on related initiatives, including allowing listed companies to trade crypto and introducing spot crypto exchange-traded funds in South Korea.
Lee’s comments come as renewed pressure builds on the Korean won. A Tuesday Reuters report said authorities are facing the risk of significant dollar outflows amid trade tensions with the United States and a weakening currency.
