South Korea's Central Bank Advocates for Gradual Stablecoin Rollout
By: Eva Baxter
The Bank of Korea (BoK) is taking a cautious approach towards the integration of stablecoins into the financial system, emphasizing the need for a gradual rollout. According to recent reports, Ryoo Sangdai, the deputy governor of the BoK, has advocated for the introduction of stablecoins by regulated commercial banks before extending it to other sectors. This move aims to create a secure framework as the nation refines its cryptocurrency policies.
According to a Tuesday press conference covered by Yonhap News, Ryoo emphasized that banks should serve as the primary issuers of won-denominated stablecoins in the initial phase. The decision is informed by the stringent regulatory environment within which banks operate, which is expected to provide a safety net during the stablecoin introduction. Ryoo stated, "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."
The call for a measured rollout comes amidst an expanding interest in stablecoins and their potential to revolutionize traditional financial systems by providing rapid, low-cost transactions while mitigating volatility risks associated with cryptocurrencies like Bitcoin and Ethereum. The South Korean central bank appears intent on avoiding the pitfalls experienced by other countries that rapidly adopted crypto technologies without ample precautions. By using banks as a controlled entry point for stablecoin issuance, the BoK aims to safeguard financial stability and reduce associated risks.
As the BoK navigates its way forward, the strategy reflects an understanding of both the transformative potential and the inherent risks of the digital financial ecosystem. Introducing stablecoins via banks serves not only as a regulatory safeguard but also as a stepping stone for broader financial integration. The BoK recognizes the importance of proceeding cautiously with stablecoin adoption, seeking to balance innovation with security.
