Bank of Korea establishes virtual asset committee as crypto market surges 40%

The Bank of Korea announced the creation of a dedicated virtual asset committee to monitor the rapidly evolving cryptocurrency market, signaling a shift toward tighter oversight.

The move comes as South Korea’s financial sector increasingly explores stablecoins and digital currencies, prompting the central bank to refocus its efforts from research to practical implementation.

Alongside this new committee, the Bank of Korea has rebranded its central bank digital currency (CBDC) research teams, transforming them into operational units tasked with developing digital currency infrastructure. However, the bank has postponed its retail CBDC pilot, citing legal uncertainties and banking sector concerns.

Bank of Korea’s new virtual asset team to oversee crypto and stablecoins

The newly formed Virtual Asset Team under the Bank of Korea will be responsible for monitoring cryptocurrency market trends, assessing risks, and collaborating with government agencies on regulatory frameworks. A central bank official confirmed that the team will also address stablecoin-related discussions, particularly as local banks push for won-pegged stablecoins.

“The Virtual Asset Team will ensure that we are prepared to respond to market developments while maintaining financial stability,” — Bank of Korea spokesperson, in a statement to Yonhap News.

The decision follows growing legislative momentum around stablecoins, with several South Korean banks already planning to launch their own stablecoin projects by late 2025.

CBDC research teams rebranded for practical implementation

The Bank of Korea has renamed its Digital Currency Research Team to the Digital Currency Team, emphasizing a shift from theoretical study to active development. Two additional teams—Digital Currency Technology Team and Digital Currency Infrastructure Team—will focus on technical research and platform testing, including deposit token management.

“This restructuring reflects our commitment to advancing digital currency initiatives beyond just exploration,” — Bank of Korea official, speaking to Chosun Daily.

Despite these efforts, the Bank of Korea has delayed its retail CBDC pilot, originally scheduled to run from April to June 2024. The postponement comes amid concerns from commercial banks about implementation costs and regulatory clarity.

Stablecoins gain favor over CBDCs in South Korea

While the Bank of Korea continues exploring a digital won, eight major South Korean banks are moving ahead with plans to issue won-backed stablecoins by 2026. The banks argue that stablecoins offer a more immediate solution for digital payments, reducing reliance on a central bank-issued alternative.

“Banks should lead stablecoin issuance before expanding to other sectors,” — Ryoo Sangdai, Deputy Governor of the Bank of Korea, in a recent policy discussion.

The growing preference for stablecoins aligns with South Korea’s pro-crypto political shift, exemplified by President Lee Jae Myung’s campaign promises to support crypto ETFs and stablecoin adoption.

What’s next for the Bank of Korea’s digital currency plans?

The Bank of Korea has not abandoned its CBDC ambitions but is taking a cautious approach. Governor Lee Chang-yong stressed that digital currency, in some form, remains a future necessity.

“We will resume CBDC discussions once legal uncertainties are resolved,” — Bank of Korea official, in a statement.

For now, the focus remains on stabilizing the crypto market through the new virtual asset committee while banks drive innovation with private stablecoins.

Key points:

• The Bank of Korea is stepping up crypto oversight with a new regulatory committee.

• CBDC research teams have been restructured to focus on practical development.

• Retail CBDC testing is postponed amid banking sector concerns.

• South Korean banks are prioritizing stablecoins over a central bank digital currency.