Bank-Issued KRW Stablecoins Proposed by Bank of Korea
Bank of Korea (BOK) recommends new legislation requiring any KRW stablecoins to be issued by regulated banks and distributed through bank-led consortia with non-bank partners. In its 140-page report, the BOK warned that private issuers lack safeguards to guarantee redeemability or legal protections, creating risks of depegging, capital flight, and weakened monetary policy. The report also highlights gaps in consumer protection laws, potential conflicts with banking-commerce separation, and the threat of stablecoin runs. The BOK urges establishment of a joint policy council among monetary, foreign exchange, and financial regulators to oversee KRW stablecoins and ensure transparency and stability. To align with global standards, the Financial Services Commission will submit phase two of the Virtual Asset User Protection Act—banning stablecoin interest payments and clarifying legal frameworks. Crypto traders and financial institutions are now assessing the impact of bank-issued KRW stablecoins on market trust and long-term monetary stability.
Bullish
The Bank of Korea’s push for bank-issued KRW stablecoins under a clear regulatory framework reduces uncertainty and strengthens consumer protection. In the short term, traders may experience increased volatility as the market adjusts to potential new legislation. However, long-term prospects for KRW stablecoins are positive: bank oversight and consortium distribution build trust, align with international standards, and support monetary stability. This clarity is likely to drive adoption and liquidity, making the news bullish for KRW stablecoins.