Lee Chang-yong, the governor of South Korea’s central bank, has expressed concerns about the risks posed by Korean won-pegged stablecoins to the financial system.

During a press briefing on June 18, 2025, he said that these stablecoins might increase the demand for US dollar-based stablecoins.

“Issuing won stablecoins may not reduce the use of dollar stablecoins, but rather facilitate the exchange between dollar stablecoins and won stablecoins, which may increase the demand for dollar stablecoins,” Lee explained.

He noted that this situation could complicate the central bank’s foreign exchange oversight.

These remarks occur as President Lee Jae Myung supports the use of won-pegged stablecoins to reduce capital outflows in the digital finance era.

Despite these worries, the Bank of Korea (BOK) does not oppose the development of won-based stablecoins, provided that sufficient measures are taken to address associated risks.

This discussion about local stablecoins coincides with global efforts to regulate stablecoins, especially in the US. The recently passed GENIUS Act has promoted dollar-pegged stablecoins.

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🔗 Source: The Block

🧠 Food for thought

1️⃣ Currency sovereignty battles extend to stablecoin markets

South Korea’s stablecoin debate highlights a growing tension between monetary sovereignty and global digital finance trends.

The central bank governor’s concern that won-pegged stablecoins might actually increase demand for USD stablecoins reflects a fundamental challenge faced by many nations: how to maintain monetary autonomy in an increasingly borderless digital asset ecosystem.

This tension is evident in the market dominance of USD stablecoins, which account for $253 billion of the $261 billion total stablecoin market capitalization 1.

South Korea isn’t alone in this struggle. Several countries, including China, Japan, and the European Union, have explored domestic currency stablecoins partly to counter the dollarization of digital finance.

The Korean case demonstrates how even technologically advanced economies must balance innovation with protecting domestic capital flows, as the President’s agenda explicitly aims to prevent capital flight through promoting won-pegged alternatives.

2️⃣ Regulatory frameworks evolve from reactive to proactive approaches

South Korea’s proposed Digital Asset Basic Act represents a shift from reactive regulation to forward-looking governance of stablecoins.

The legislation’s specific requirements, including a 500 million won ($367,890) minimum capital for stablecoin issuers, show how regulators are moving beyond general guidelines to detailed operational requirements 2.

When BxB Inc. launched the first won-backed stablecoin (KRWb) in 2019, it operated in a relatively unregulated environment with self-imposed standards like multi-signature checkpoints and third-party auditing 3.

The progression from this early market-led approach to comprehensive government oversight demonstrates how the stablecoin sector has matured from experimental technology to recognized financial infrastructure requiring formal supervision.

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