South Korea should allow banks to issue stablecoins first before gradually expanding permissions to non-banking sectors, a senior central bank official said Tuesday, as the country advances crypto-friendly policies under President Lee Jae-myung‘s administration.

Bank of Korea Deputy Governor Ryoo Sang-dai delivered the message to heads of major commercial banks during a meeting at the central bank‘s Seoul headquarters, according to Yonhap News, the country‘s largest news agency.

“It would be desirable to initially allow stablecoin issuance primarily through banks, which are subject to higher levels of financial regulation, and gradually expand it to the non-banking sector,” Deputy Governor Ryoo Sang-dai said Tuesday.

The approach comes as South Korea grapples with massive growth in digital asset trading as transactions surged from $12.9 billion (17.59 trillion won) in Q3 2024 to $42.4 billion (57.9 trillion won) in Q1 2025.

Nearly half of all digital assets transferred abroad during the first quarter of 2025—worth $19.5 billion—were in stablecoins, raising concerns about capital outflows that threaten the nation‘s monetary sovereignty.

"The aim is to establish a safety net, considering the potential for market disruption or consumer harm,” Sang-dai said.

Changing the game

The deputy governor warned that while stablecoins offer innovation potential, they could “shift the fundamental stance we have maintained on foreign exchange liberalization and the internationalization of the Korean won.” 

He also flagged concerns about potential market disruption, financial instability, and the need to consider models like “narrow banking,” where institutions only provide payment services without lending.

Bank of Korea Governor Rhee Chang-yong has also signaled support for stablecoins, while urging caution, according to a report from Korea JoongAng Daily on Sunday.

“To be clear, won-backed stablecoins are necessary and [I] do not disagree with its issuance,” Rhee said during a press conference last Wednesday, but pointed out the need to closely examine their potential impacts on foreign exchange management.

President Lee, who took office this month following a snap election, has made stablecoin regulation a priority. 

His administration introduced the Digital Asset Basic Act, which would allow domestic companies with at least $366,749 (500 million won)  in capital to issue won-backed stablecoins.

The Bank of Korea is also exploring a hybrid model where its planned deposit tokens could coexist with private-sector stablecoins on public blockchains. 

But some industry experts remain skeptical, with Peter Chung, head of research at algorithmic crypto trading firm Presto Labs, previously telling Decrypt it’s “not clear” how combining tokenized deposits and private-sector stablecoins would truly protect monetary sovereignty.

Edited by Sebastian Sinclair

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