Kaia "South Korea's 'bank-centric' stablecoin policy is irrational… must present clear standards"

The Bank of Korea's plan to have banks at the center of stablecoin issuance in South Korea has been criticized for lacking logical justification. Seo Sang-min, chairman of the Kaia DLT Foundation (Kaia DLT Foundation), emphasized that both banks and non-bank institutions should be able to compete fairly under clear regulatory standards.

On the 29th (local time), Cointelegraph reported that the Bank of Korea recently stated in a report that banks are suitable issuers of won-pegged stablecoins. The report argued that banks are already subject to strict supervision such as capital regulations, foreign exchange regulations, and anti-money laundering (AML) requirements, which can minimize the risks of issuing stablecoins. It also proposed forming a consultative body with joint participation from the monetary, foreign exchange, and financial authorities to decide issuer qualifications, issuance scale, and management standards.

In response, Seo said, "While the central bank's concerns are understandable, the argument that banks should lead stablecoin issuance is not persuasive." He added, "Regardless of the issuer, a clear set of rules is needed to reduce currency risk while promoting innovation," and "Both banks and non-bank institutions that meet the standards should be able to compete."

Seo stressed in particular that "if the Bank of Korea presents concrete criteria for issuer credibility and risk mitigation measures, it would provide much more practical guidance to market participants."

Earlier, Yoo Sang-dae, a deputy governor of the Bank of Korea, said in June that "for a safe introduction, banks would initially issue stablecoins, and then the scheme would be gradually expanded to the private sector."

Meanwhile, the Bank of Korea proposed a measure to completely ban interest payments on stablecoins due to direct competition with deposits, and instead to promote the commercialization of deposit-type tokens (Deposit Token). Seo responded, "It is not desirable to grant profit-generating functions to stablecoins themselves, but banning activities that generate additional revenue using them is excessive," and warned that "such measures would seriously limit usability and adoption."