Bank of Korea Warns Against Non-Bank Stablecoins, Citing Monetary Policy Risks

Bank of Korea Governor Lee Chang-yong has raised alarms over the potential issuance of won-pegged stablecoins by non-bank entities. Such moves could disrupt monetary policy and foreign exchange regulations, drawing parallels to the chaotic private currency systems of the 19th century.

Lee emphasized the risk of market confusion, warning that unchecked stablecoin issuance might force a return to centralized banking systems. The central bank chief also highlighted potential conflicts with Korea's foreign exchange liberalization policies and structural impacts on traditional banks.

The debate extends beyond the BOK's purview, requiring coordination with other regulatory bodies. This development comes as global regulators increasingly scrutinize stablecoins' role in financial ecosystems.