South Korea Proposes Bank-Led Stablecoin Issuance to Mitigate Risks

Bank of Korea officials advocate for a phased approach to stablecoin issuance, starting with regulated banks before expanding to non-banking sectors. Deputy Governor Ryoo Sang-dai emphasized the need for stringent oversight during a meeting with commercial bank leaders. The proposal aligns with President Lee Jae-myung's crypto-friendly policies, aimed at balancing innovation with financial stability.

Stablecoin transfers abroad reached $19.5 billion in Q1 2025, raising concerns over capital flight and FX management. Domestic digital asset transactions surged from $12.9 billion in Q3 2024 to $42.4 billion in Q1 2025, underscoring the urgency for regulatory clarity. The government's draft legislation WOULD permit won-pegged stablecoins issued by local firms, marking a strategic shift toward blockchain integration.