Shin Hyun-song, the nominee to head the Bank of Korea, emphasized the need for a central bank digital currency and bank-issued deposit tokens to form the backbone of South Korea's digital monetary system, with stablecoins playing a secondary, supplementary role. He stated that central bank digital currencies and deposit tokens can coexist with stablecoins in a competitive and complementary manner. In his written remarks, 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 facilitating the trading of tokenized assets and enabling programmable payments, rather than replacing state-backed currency.
Shin's proposal is in line with the central bank's existing stance that stablecoin issuance should be initiated by regulated banks, citing compliance requirements such as anti-money laundering and customer checks. He also raised concerns about the efficiency of blockchain-based coins in foreign exchange, citing regulatory uncertainty and added costs.
Regarding cryptocurrencies, 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 could pose risks to monetary policy and financial stability, calling 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. This development follows the launch of the country's first fully regulated stablecoin, KRW1, in February, which was introduced through a partnership between crypto custody service provider BDACS and Woori Bank.