South Korea’s central bank said it should have legal authority over the approval of won-based stablecoins, warning they could disrupt monetary policy if treated like legal tender.
The Bank of Korea, South Korea‘s central bank, said monetary authorities must be involved from the start if the country allows the issuance of stablecoins tied to the Korean won, BusinessKorea has learned, citing a senior BOK official.
In a statement, the official said that if won-based stablecoins are used like legal tender, they could complicate monetary policy operations and that this would require the BOK’s involvement in the approval process. They added that, like in the United States, the Fed also exercises “some authority in related legislation.”
Koh Kyung-chul, who leads the central bank’s electronic finance team, earlier also said that stablecoins could affect how the BOK carries out monetary policy, manages financial stability, and oversees payments and settlements. He also stressed that the central bank should have “substantial legal authority” at the authorization stage when it comes to approving stablecoin issuers.
In early May, Democratic Party lawmaker Min Byung-duk said that nearly half of the cryptocurrencies sent overseas from South Korea’s major exchanges in the first quarter were dollar-based stablecoins, citing data from the Financial Supervisory Service.
According to Byung-duk, around 56.8 trillion won (around $40.6 billion) worth of cryptocurrencies were transferred overseas between January and March from five crypto exchanges: Upbit, Bithumb, Coinone, Cobbit, and Gopax. Of this amount, 26.87 trillion won, or 47.3%, was in stablecoins like Tether (USDT) and USD Coin (USDC).
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