South Korea is racing to launch won-based stablecoins, energizing its crypto sector under President Lee Jae-Myung’s leadership. President Lee’s election has stirred rapid support for a national digital asset pegged to the Korean won. Lawmakers, banks, and tech firms now see these tokens as central to financial innovation. Despite strong backing, many officials still warn of potential economic risks. Yet, momentum for adoption continues to build with urgency.
Won-based stablecoins aim to compete with dominant dollar-pegged versions like tether and circle. These digital tokens maintain value stability by linking to fiat currencies or commodities. They differ from volatile cryptocurrencies like bitcoin by staying consistently priced through financial backing. In Korea, a surge in demand for dollar-based stablecoins triggered capital outflow concerns. As a result, policymakers have rallied behind local alternatives to protect the won’s status.
Regulators say won-based stablecoins could be backed by safe Korean financial assets like treasury bills. President Lee appointed Kim Yong-beom, a crypto advocate, as his top economic adviser. Kim once said stablecoins could be regulated even more tightly than traditional currencies. Lawmakers have already introduced new legislation supporting private sector participation in issuance. Moreover, fintech stocks have soared in response to the policy shift.
Kakao Pay’s stock nearly doubled in a week on speculation of its role in issuing won-based stablecoins. Local banks have launched task forces to explore their entry into the digital asset space. Institutions are now collaborating with tech firms to prepare for the transition. Although profits remain unclear, banks view this shift as a strategic necessity. They expect major roles once regulations formally allow stablecoin issuance.
However, not everyone supports the rapid push for won-based stablecoins. The Bank of Korea has voiced strong concerns about monetary policy risks. Governor Rhee Chang-yong warned that private issuers could weaken central bank influence. He fears a shift in how money moves within the economy. Furthermore, regulators worry about illegal cross-border flows using stablecoins.
Cross-border transfers of won-based stablecoins could bypass strict capital controls. Critics argue this could threaten Korea’s financial integrity and regulatory compliance. Traditional cryptocurrencies like bitcoin already face monitoring under domestic travel rule laws. Still, regulators fear stablecoins might fall into gray zones without clear oversight. Therefore, the central bank urges a cautious, phased approach.
Nonetheless, policymakers continue pushing forward with won-based stablecoins to avoid falling behind global trends. France, Singapore, and the US have already embraced stablecoin use in retail and banking. President Lee wants South Korea to lead in this digital finance race. While debate remains, enthusiasm for local stablecoins is only growing stronger. Now, Korea stands at a critical financial crossroads.
