Officials warn that unregulated stablecoins could threaten financial stability and monetary control
The Bank of Korea (BOK) is weighing the launch of a state-backed stablecoin, officially referred to as a deposit token, as part of efforts to reduce South Korea’s reliance on foreign-issued digital assets.
The plan, revealed during the ‘Blockchain Leaders Club’ event on Tuesday by BOK Deputy Governor Lee Jong-ryeol, would integrate these tokens with public blockchain networks to bolster the national digital currency ecosystem.
“We are considering a plan to link the Bank of Korea’s deposit tokens with the public blockchain system,” Lee stated, underscoring the bank’s ambition to shape the future of digital money from a national perspective.
Described as a “type of stablecoin” issued under the BOK’s digital currency framework, the tokens are intended to coexist with privately issued alternatives like USDT and USDC.
Surge in stablecoin use raises red flags for Korean regulators
Privately issued stablecoins, especially those pegged to the U.S. dollar like Tether’s USDT and Circle’s USDC, have gained widespread popularity among South Korean traders due to their price stability and access to global platforms such as Binance.
In Q1 alone, these assets accounted for 47.3% of the nation’s crypto outflows, amounting to 26.87 trillion won (around $19.1 billion), according to Korean media Maeil Business Newspaper.
BOK Deputy Governor Lee called the growing dominance of global stablecoins “concerning,” warning that their unchecked use could undermine monetary sovereignty, fuel money laundering, and destabilize the financial system.
Prominent legal and financial figures have echoed these concerns, urging swift regulatory intervention to limit systemic risks.
Political pressure mounts for a homegrown digital alternative
Amid the rising influence of foreign stablecoins, political leaders are rallying behind a Korean won-pegged alternative.
Opposition leader and presidential frontrunner Lee Jae-myung has proposed issuing a national stablecoin to curb crypto capital flight, estimated at 56.8 trillion won ($40.8 billion), and reduce dependency on overseas digital assets.
Min Byoung-dug, Democratic Party lawmaker and head of the party’s Digital Asset Committee, has advocated for institutionalizing stablecoin frameworks before foreign issuers cement their dominance.
“That is the only way we can secure a sure position in the global battle for stablecoin hegemony,” he said last week, according to South Korean media outlet Edaily.
That urgency is now being echoed in the private sector. A consortium of leading Korean banks has formed a joint venture to develop a unified Korean stablecoin.
Coordinated by the Open Blockchain and DID Alliance, the initiative aims to prevent market capture by unregulated players and maintain domestic control over liquidity flows. However, without finalized stablecoin regulations in place, the timeline for launch remains uncertain.
Their combined efforts come as the global stablecoin market continues to expand, reaching $247.483 billion as of this week, up $3.537 billion in just seven days.
