Bank of Korea: "Must Intervene from the Authorization Stage of KRW Stablecoin Issuance"

Amid ongoing discussions in the industry about KRW-based stablecoins (virtual assets linked to the value of fiat currency), the Bank of Korea has indicated its intention to intervene from the authorization stage of these virtual assets.

According to industry sources on the 12th, Ko Kyung-chul, head of the Bank of Korea's electronic finance team, attended the Korean Financial Law Association's academic conference held at the Bank of Korea's annex on the 9th and gave a presentation on the topic of 'Trends and Future Tasks Related to Stablecoins.'

In his presentation, Ko stated, "Stablecoins have a significant impact on the central bank's policy execution, including monetary policy, financial stability, and payment systems," and emphasized, "There is a need to grant the central bank substantial legal authority at the authorization stage regarding issuer entry regulations."

Ko further stressed, "By substantially intervening at the authorization stage, the central bank should minimize the negative impact on its policy execution."

Previously, in its payment and settlement report last month, the Bank of Korea expressed concerns about stablecoins, stating, "They can act as factors that infringe on monetary sovereignty and undermine the effectiveness of monetary policy."

Furthermore, it pointed out, "If a coin sell-off occurs due to external shocks, related risks could transfer to the traditional financial market, undermining the safety of the payment and settlement system," and emphasized, "Careful consideration is needed when preparing introduction and regulatory measures."

Moreover, Bank of Korea Governor Lee Chang-yong mentioned at a press conference on the 5th, "Regulation on Tether (USDT) is urgent," and "We need to examine whether to allow KRW-based stablecoins."

Meanwhile, recent regulations related to stablecoins have become a hot topic of debate in political circles.

Lee Jae-myung, the Democratic Party's presidential candidate, expressed in a discussion with economic YouTubers on the 8th, "We need to create a KRW-based stablecoin market to prevent the outflow of national wealth."

However, Lee Jun-seok, the Reform Party's presidential candidate, strongly criticized this, calling it an "irresponsible claim." Candidate Lee criticized on his official social media on the 8th, "Lee Jae-myung's economic views are always dangerous and experimental," and "He irresponsibly throws out unverified ideas and repeats plausible words without understanding the market."

The Democratic Party also countered this. On the same day, Representative Min Byung-deok argued, "Banning all KRW-based stablecoins based on the failure of Terra is no different from claiming to abolish the entire printing technology because one copier broke down." He further explained, "The stablecoin being reviewed by the Democratic Party is designed to deposit 1:1 cash reserves in bank or trust accounts, mandate accounting audits and real-time balance disclosures, and add statutory interest in case of redemption delays, in line with international standards," and "It has no structural similarities with Terra/Luna."