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Won-based stablecoin legislation unlikely this year as BOK, regulators clash over banks' role

Published: 25 Nov. 2025, 21:00

Heads of major financial institutions stand for photos before a market monitoring meeting at the Seoul Government Complex in Jongno District, central Seoul, on Nov. 14. From left are: Financial Supervisory Service Governor Lee Chan-jin, Bank of Korea Governor Rhee Chang-yong, Deputy Prime Minister Koo Yun-cheol and Financial Services Commission Chairman Lee Eog-weon. [MINISTRY OF ECONOMY AND FINANCE]

Legislation to permit the issuance of won-based stablecoins seems unlikely to pass this year, as the financial regulators' aim to open the market to tech companies remains deterred by the central bank's insistence that banks hold a majority stake in any issuing entity.

According to financial authorities and the Bank of Korea (BOK), the two sides agree that banks should be involved in the issuance of stablecoins. However, they differ sharply on how much ownership banks should hold: the BOK insists that a consortium of banks own at least 51 percent of any stablecoin issuer seeking regulatory approval, while regulators want to take the chance to innovate Korea's finance structure and involve diverse players.

The central bank argues that allowing nonbank companies to lead such businesses would undermine existing regulations that prohibit industrial firms from owning financial institutions, since stablecoins function like deposit institutions by collecting funds from users.

In a recent report titled “Key Issues and Responses Regarding Won-based Stablecoins” (translated), the BOK wrote: “Allowing nonbank companies to issue stablecoins is essentially equivalent to permitting them to engage in narrow banking — simultaneously issuing currency and offering payment services.” The report also warned that online platform companies issuing their own stablecoins could integrate payment services into their ecosystems, further consolidating monopolistic power.

The central bank also believes that giving banks a leading role would reduce risks to financial and foreign exchange stability. If stablecoins are moved abroad to circumvent foreign exchange regulations, it could increase the risk of illegal fund transfers and hamper currency management.

“Banks, which are already under regulatory oversight and have extensive experience handling anti-money laundering protocols, are best positioned to serve as majority shareholders in stablecoin issuers,” a BOK official said on condition of anonymity.

The Bank of Korea main building in Jung District, central Seoul, on Aug. 12 [YONHAP]

A banner for Circle Internet Group, the issuer of one of the world’s biggest stablecoins, hangs on the front of the New York Stock Exchange (NYSE) to celebrate the company’s IPO in New York on June 5. [REUTERS/YONHAP]

Financial authorities are in a difficult position. They worry that mandating a majority stake for banks would reduce participation from tech companies and limit the market’s potential for innovation.

Many firms preparing to launch stablecoins oppose bank-led issuance. Hashed Open Research, an affiliate of the blockchain investment firm Hashed, argued in a recent report that major stablecoin issuers such as Tether and Circle operate on capital-market-based models rather than bank-based ones.

“To maintain competitiveness in the digital economy, Korea should adopt a capital market-led structure instead of a bank-centered one,” the report said. Kim Yong-beom, the current senior presidential secretary for policy, formerly headed Hashed Open Research.

Even if the two sides agree on the ownership issue, other issues remain unresolved, including limits on the total issuance amount and the regulatory framework. The BOK is calling for a legally mandated interagency council to make stablecoin policy decisions by unanimous vote, but financial regulators are pushing back, citing a lack of precedent or legal basis for such a requirement.

Representation of Tether stablecoin cryptocurrency [REUTERS/YONHAP]

The standoff has left the market in limbo. Some companies, such as Naver, are actively preparing by exploring a merger with crypto market Dunamu to secure approval, but many others remain hesitant due to unclear regulatory direction. “Even dollar-based stablecoins see little use outside of crypto trading,” said an official at a fintech company who requested anonymity. “There’s doubt about whether a won-based stablecoin will catch on, and with no clarity on approval rules, most firms are taking a wait-and-see approach.”

“To earn public trust, stablecoins can’t be left entirely in the hands of tech firms, and financial institutions must be involved," said Kim Sang-bong, an economics professor at Hansung University. "But if banks dominate, innovation could be stifled. A more realistic solution may be to start by granting licenses to card companies and other firms focused on payments.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY KIM NAM-JUN [[email protected]]