The Bank of Korea’s (BOK) push for the banking sector to lead the introduction of won-denominated stablecoins is illogical, says Dr. Sangmin Seo, president of the Kaia DLT Foundation.
ua report published on Monday, the central bank said banks are already subject to strict regulations, including capital, foreign exchange and anti-money laundering requirements, which could help reduce any risks associated with introduction of stablecoins into the country.
At the same time, the BOK wants a political advisory body made up of currency, foreign exchange and financial authorities to decide on issuer eligibility, volumes and other key issues.
Seo told Cointelegraph that while central banks’ concerns about stablecoin risks are understandable, his argument that banks are leading the rollout “seems to have no logical basis.”
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Seo argued that a better solution would be to establish clear rules for stablecoin issuers that can “minimize monetary risks and encourage innovation.”
He said it would also allow both banking and non-banking institutions that meet these criteria to “compete and demonstrate their strength”.
“It would be even more valuable if the Bank of Korea could provide guidance on how these risks can be mitigated and what qualifications are needed for an issuer to be considered trustworthy.”
In June, BOK Deputy Governor Ryoo Sangdai proposed that South Korean banks be the primary stablecoin issuers in the country to provide a safety net, before gradually expanding to other sectors.
A ban on stablecoin yields is also on the table
The BOK also wants to ban interest payments on stablecoins, arguing that it could directly compete with bank deposits and disrupt the sector, and has instead proposed commercializing deposit tokens, digital tokens that represent deposits at a bank or financial institution.
Seo said that a complete ban on stablecoin yields would be an excessive measure and could harm and limit adoption.
“While I agree that stablecoins themselves should not include yield-generating features, I believe it would be excessive to limit the generation of additional yield through the use of stablecoins,” he said.
“That would significantly limit their utility and adoption; so I think allowing additional yield to be created should be allowed.”
The stablecoin market in South Korea is heating up
At least eight major South Korean banks announced plans in June to offer a stablecoin pegged to the South Korean won, with a planned launch in late 2025 and early 2026.
Related: South Korea caps crypto lending rates at 20%, bans leveraged loans
Meanwhile, Naver Financial, the fintech arm of South Korean tech conglomerate Naver, is reportedly moving forward with a plan to acquire Dunamu, which operates the country’s largest cryptocurrency exchange, Upbit, and plans to launch a stablecoin project backed by the Korean miner once the acquisition is complete.
The crypto industry in South Korea has benefited from a more favorable environment following the election of President Lee Jae-myung in June, who has since initiated various crypto-related laws, including a bill to legalize stablecoins.
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