Bank of Korea Pushes to Restrict Won Stablecoins to Licensed Banks

The Bank of Korea (BOK) has reiterated its recommendation that issuance of won-denominated stablecoins be limited exclusively to licensed commercial banks, reinforcing its cautious stance as South Korea finalizes its digital asset regulatory framework.

The central bank’s position reflects growing concern over financial stability, capital controls, and anti-money laundering risks, particularly following a recent operational incident involving Bithumb, where the exchange mistakenly transferred approximately $40 billion worth of so-called “ghost” Bitcoin to clients.

Why the BOK Wants Bank-Only Issuance

The BOK’s argument centers on three core pillars: regulatory standards, monetary control, and institutional trust.

1. Regulatory Standards and AML Compliance

The central bank argues that commercial banks already operate under strict capital adequacy requirements, liquidity rules, and anti-money laundering frameworks. In its view, this existing supervisory structure makes banks the most suitable entities to manage stablecoin-related risks.

Allowing non-bank entities to issue won-backed stablecoins, the BOK contends, would introduce additional oversight complexity and elevate systemic vulnerabilities.

2. Capital Flow and Monetary Control

A major concern involves cross-border capital movement. The BOK warns that privately issued stablecoins could enable users to convert won into dollar-pegged digital assets more easily, potentially bypassing capital flow management measures.

From a macro perspective, this raises questions about monetary sovereignty and exchange rate stability, especially in volatile market conditions.

3. Trust Over Technology

BOK Governor Rhee Chang-yong has emphasized that “currency operates on trust, not technology,” signaling skepticism toward private issuers’ ability to maintain a durable peg.

He cited historical examples such as the collapse of Terra/Luna and the temporary de-pegging of USDC as evidence that institutional backing, rather than technological design alone, is essential for stablecoin resilience.

Regulatory Divide With the FSC

The debate is unfolding within the broader development of South Korea’s Digital Asset Basic Act, expected to be finalized in 2026.

While the BOK favors a bank-led consortium model, requiring banks to hold at least 51% equity in issuing entities, the Financial Services Commission (FSC) has voiced concerns that such rigidity could stifle innovation and limit participation from fintech firms.

Key points of divergence include:

• Primary Issuers
  • BOK: Licensed commercial banks only
  • FSC: Banks and regulated fintech companies
• Ownership Structure
  • BOK: Bank-led consortia with ≥51% bank equity
  • FSC: More flexible ownership to encourage innovation
• Reserve Requirements
  • Both sides support 100% reserve backing in safe assets
• Incentives
  • BOK: No interest or rewards allowed
  • FSC/Fintech perspective: Competitive features may be permitted

Proposed Ban on Interest Payments

On February 20, 2026, South Korea’s ruling Democratic Party introduced a proposal to prohibit interest payments on won-denominated stablecoins. The goal is to prevent such tokens from functioning as yield-generating investment products rather than payment instruments.

This proposal aligns more closely with the BOK’s conservative stance than with the FSC’s innovation-focused approach.

Timeline Delayed

Ongoing disagreements between the BOK and the FSC have delayed full implementation of the stablecoin framework until later in 2026.

The outcome of this policy dispute will shape whether South Korea adopts a tightly controlled, bank-dominated stablecoin model or a more open framework that integrates regulated fintech participation.

For now, the central bank’s position remains clear: won-denominated stablecoins, if permitted, should operate within the traditional banking perimeter rather than outside it.

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