{"id":55193,"date":"2025-10-28T08:01:42","date_gmt":"2025-10-28T08:01:42","guid":{"rendered":"https:\/\/dogewisperer.com\/?p=55193"},"modified":"2025-10-28T08:01:42","modified_gmt":"2025-10-28T08:01:42","slug":"bank-of-korea-calls-for-bank-issued-stablecoins-to-prevent-financial-risks","status":"publish","type":"post","link":"https:\/\/dogewisperer.com\/?p=55193","title":{"rendered":"Bank Of Korea Calls For Bank-Issued Stablecoins To Prevent Financial Risks"},"content":{"rendered":"
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The Bank of Korea (BOK) has urged lawmakers to adopt a bank-led model for stablecoin issuance ahead of the upcoming regulatory framework, warning that Korean Won (KRW)-pegged tokens could \u201crepeat past monetary failures.\u201d<\/p>\n

BOK Raises Financial Stability Concerns<\/h2>\n

On Monday, the Bank of Korea released a 140-page report warning that stablecoins could unlock new possibilities for the Korean economy but could also \u201csow the seeds of new instability.\u201d<\/p>\n

According to local news media outlets, the central bank urged<\/a> lawmakers to carefully review won-pegged digital assets ahead of the release of the long-awaited regulatory framework, listing multiple risks that these tokens could pose to financial and monetary stability.<\/p>\n

As reported<\/a> by Bitcoinist, Financial Services Commission (FSC) Chairman Lee Eun-won\u00a0recently confirmed that the regulatory agency plans to submit the second phase of the Virtual Asset User Protection Act to the National Assembly this year, which will follow US regulatory steps and include a ban on stablecoin interest payment.<\/p>\n

The BOK report affirmed that the promise behind stablecoin raises unrealistic expectations in the market, arguing that \u201cThe pledge of \u20181 coin equals 1 won\u2019 is merely a private agreement between issuers and users and is not legally or institutionally guaranteed by the central bank.\u201d<\/p>\n

\u201cIf the issuer fails to keep the redemption promise, stablecoin holders, unlike bank depositors, are not protected under relevant laws,\u201d the BOK added<\/a>. It warned that these tokens are \u201cprone to deppeging,\u201d citing greater concerns for non-dollar stablecoins, where the risk is higher due to thinner liquidity.<\/p>\n

Additionally, the central bank highlighted the gaps in consumer protection laws and the potential that these tokens could \u201cenable regulatory evasion and capital flight, weaken the effectiveness of monetary policy and undermine banks\u2019 traditional role as financial intermediaries.\u201d<\/p>\n

A Bank-Led Model For Won-Pegged Stablecoins<\/h2>\n

Amid the potential risks, the BOK considers that \u201ctrust is crucial to reliably support innovation, so institutional safeguards are necessary.\u201d It reiterated that stablecoin issuance must be led and strictly regulated by banks to ensure reliability and public trust.<\/p>\n

In July, BOK Governor Lee Chang-yong expressed<\/a> concerns about the potential issuance of stablecoins pegged to the Korean Won by non-bank entities, arguing that they could confuse monetary policies and foreign exchange regulations.<\/p>\n

\u201cIf banks become the main issuers of stablecoins, or if stablecoins are issued through bank-led consortia, many of these associated risks could be managed under the current regulatory framework,\u201d the Monday report explained. \u201cNon-banking companies, such as IT firms, can also participate in bank-centered consortia to drive innovation and growth.\u201d<\/p>\n

Notably, financial institutions in Korea have been preparing for two potential legalization scenarios over the past few months, as it has been unclear if non-bank entities will be allowed to issue the digital assets.<\/p>\n

The sector has reportedly<\/a> explored a business model in which banks establish a joint venture to collectively issue stablecoins, while also contacting various non-bank companies to prepare for the upcoming framework.<\/p>\n

Kim Chul, head of the BOK\u2019s\u00a0Payment & Settlement Systems Department, stated that under this approach, regulators can closely monitor the sector\u2019s scale and maintain stability, \u201callowing this new form of currency to take root within the formal financial system.\u201d<\/p>\n

Another BOK official added that \u201cstablecoin legislation is moving quickly, and we hope this report serves as a key reference for those discussions.\u201d Ultimately, the central bank called for a joint policy council among monetary, foreign exchange, and financial authorities.<\/p>\n

\"stablecoin,<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The Bank of Korea (BOK) has urged lawmakers to adopt a bank-led model for stablecoin issuance ahead of the upcoming regulatory framework, warning that Korean Won (KRW)-pegged tokens could \u201crepeat past monetary failures.\u201d BOK Raises Financial Stability Concerns On Monday, the Bank of Korea released a 140-page report warning that stablecoins could unlock new possibilities […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"iawp_total_views":0,"footnotes":""},"categories":[2],"tags":[3,4,5],"class_list":["post-55193","post","type-post","status-publish","format-standard","hentry","category-news","tag-crypto","tag-doge","tag-news"],"_links":{"self":[{"href":"https:\/\/dogewisperer.com\/index.php?rest_route=\/wp\/v2\/posts\/55193","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dogewisperer.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dogewisperer.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dogewisperer.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/dogewisperer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=55193"}],"version-history":[{"count":0,"href":"https:\/\/dogewisperer.com\/index.php?rest_route=\/wp\/v2\/posts\/55193\/revisions"}],"wp:attachment":[{"href":"https:\/\/dogewisperer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=55193"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dogewisperer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=55193"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dogewisperer.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=55193"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}