Bank of Korea to Play Key Role in Shaping Stablecoin Regulation Amid Rising Crypto Adoption
Bank of Korea Commits to Active Role in Stablecoin Regulation as Crypto Usage Grows
In a significant move reflecting the growing influence of digital assets, the Bank of Korea (BOK) has announced its intention to "actively participate" in the creation of a regulatory framework for stablecoins. The central bank’s position underscores rising concerns that the growing use of these crypto-linked assets could pose challenges to monetary policy and financial stability.
In its latest report on payment systems, the BOK emphasized that, unlike general virtual assets, stablecoins are increasingly being used as instruments of payment. This shift, the bank warned, may eventually “undermine the effectiveness of monetary policies” if left unchecked.
Stablecoins Seen as a Bridge Between Crypto and Traditional Finance
The BOK report highlights the dual nature of stablecoins: while designed to offer price stability, their integration into everyday transactions could blur the lines between traditional and decentralized finance. As the bank noted, the widespread use of stablecoins may introduce risks into established financial systems, including the potential for crypto market volatility to spill over into the mainstream economy.
To help prevent this, the BOK stated it will "present its views on the desirable direction of stablecoin regulation from a central bank perspective." This initiative aims to ensure that upcoming regulations reflect both the innovative nature of digital currencies and the structural safeguards needed for financial stability.
Next Phase of South Korea’s Crypto Legislation Underway
South Korea is already recognized as one of the most crypto-active countries globally, with approximately 18.25 million residents—more than a third of the population—investing in digital assets as of December 2024. The country's five leading exchanges report daily trading volumes averaging $12.1 billion.
Following the implementation of South Korea’s first crypto-specific law in July 2024, which focused on investor protection and stricter exchange requirements, the government is now preparing a second legislative package. This upcoming bill is expected to address stablecoins specifically, define clearer categories for crypto service providers, and introduce more transparent standards for token listings and disclosures.
The Financial Services Commission (FSC) has confirmed that the drafting process for the new legislation will begin in the second half of 2025.
CBDC Trials Continue as Korea Explores Digital Finance Ecosystem
In parallel with its regulatory efforts, the Bank of Korea is also moving forward with tests of its central bank digital currency (CBDC). The initiative involves a diverse range of participants—from citizens to retail merchants and local banks—and is focused on evaluating the real-world functionality of a state-backed digital currency.
A second phase of the trial, set to begin in October, will specifically examine peer-to-peer transfers using the CBDC, further contributing to the bank’s understanding of how digital payment systems might evolve within Korea’s economy.