The nominee to lead the Bank of Korea, Shin Hyun-song, has proposed that a central bank digital currency and bank-issued deposit tokens should form the foundation of South Korea's digital monetary system, with stablecoins serving a secondary purpose. According to Yonhap, Shin stated that he anticipates central bank digital currencies and deposit tokens will coexist with stablecoins in a supplementary and competitive manner. In his written remarks submitted to parliament, Shin expressed support for introducing a won-based stablecoin, but stressed that trust in the currency must be established first.
He views stablecoins as useful for trading tokenized assets and facilitating programmable payments, rather than as a replacement for state-backed currency. Shin's proposal is in line with the central bank's existing stance that stablecoin issuance should commence with regulated banks, citing compliance requirements such as anti-money laundering and customer checks. He has also raised questions about the claim that blockchain-based coins can improve foreign exchange efficiency, citing regulatory compliance uncertainty and added costs. Furthermore, Shin noted that digital assets fail to fulfill the core functions of money as a unit of account, medium of exchange, and store of value.
The Bank of Korea has warned that privately issued tokens may pose risks to monetary policy and financial stability, advocating for strict oversight, including anti-money laundering and customer verification rules. Shin's remarks come as policymakers debate the extent to which the market should be opened, with regulators pushing for bank-led models and lawmakers proposing broader frameworks that would allow non-bank issuers under new legislation.
Recently, the country's first fully regulated stablecoin, KRW1, was launched through a partnership between crypto custody service provider BDACS and Woori Bank.