South Korea warns won-pegged stablecoins could undermine FX controls as lawmakers stall on issuer rules

Bank of Korea Governor Lee Chang-yong warned at the Asian Financial Forum that won-pegged stablecoins could complicate foreign-exchange stability and be used to circumvent capital controls—especially if paired with dollar-pegged stablecoins for cross-border transfers. Regulators are considering a registration framework to allow domestic institutions to issue virtual assets, but remain concerned about systemic and FX risks from broad stablecoin issuance. That regulatory debate has slowed passage of the proposed Digital Asset Basic Act, with a key standoff over who may issue won-backed stablecoins: the central bank favors bank-led issuance to limit FX and systemic risk, while industry groups seek broader issuer eligibility under supervision. Lawmakers explored compromises such as bank-led consortia, but progress is stalled. The legislative impasse has also delayed related measures, including exchange holding rules, allowing listed companies to trade crypto, and the launch of spot crypto ETFs. Lee’s remarks come amid depreciation pressure on the won and concerns about potential large dollar outflows tied to US–Korea tensions—heightening the urgency of FX-stability considerations for regulators and market participants. Traders should watch regulatory signals on issuer eligibility, any moves toward bank-led issuance, and potential restrictions on cross-border stablecoin flows, as these developments could affect liquidity, onshore stablecoin adoption, and risk premia for Korea-linked crypto products.