South Korea’s central bank is pushing lawmakers to bar fintech firms and other non-bank entities from issuing won-backed stablecoins, arguing that only licensed commercial banks have the compliance infrastructure to prevent money laundering and safeguard financial stability.
The Bank of Korea made the recommendation to the National Assembly on February 23, placing Seoul on course to become one of the most restrictive stablecoin jurisdictions among advanced economies.
According to Bloomberg, the central bank emphasized that allowing non-bank stablecoin issuers to enter the market prematurely could create vulnerabilities in anti-money-laundering (AML) enforcement and weaken monetary policy transmission mechanisms. The proposal reflects heightened scrutiny following operational missteps within South Korea’s crypto sector and broader volatility in digital asset markets.
Money-laundering and systemic risk concerns
At the heart of the debate is how stablecoin issuers should be supervised in a financial system that remains tightly regulated. Stablecoins—digital tokens typically pegged to fiat currencies—can move across borders quickly, raising regulatory concerns about transparency and traceability.
The BOK maintains that limiting stablecoin issuers to licensed banks would leverage existing safeguards, including capital adequacy standards, liquidity requirements, and strict AML compliance frameworks. Officials argue that banks are better positioned to manage redemption risks and ensure full reserve backing of stablecoins tied to the Korean won.
In its assessment, the central bank cautioned that unregulated or lightly supervised stablecoin issuers could facilitate illicit transactions if monitoring systems are insufficient. Financial authorities also fear that rapid growth in privately issued stablecoins might disrupt payment systems or complicate liquidity management during periods of stress.
The debate gained urgency after a domestic exchange experienced a high-profile operational error involving an incorrect bitcoin transfer, intensifying concerns about oversight of large digital asset flows. While not directly tied to stablecoin issuers, the incident reinforced calls for stricter controls in the sector.
Regulatory divide over stablecoin issuers
South Korea’s regulatory landscape is evolving under competing institutional visions. The (FSC) has been working on components of a broader digital asset framework, including provisions related to stablecoin issuers. However, discussions have stalled at times over whether issuance should be limited to banks or extended to qualified non-bank entities.
Some legislative proposals previously explored models in which consortia with majority bank ownership could operate as stablecoin issuers. Industry participants argue that such structures might balance innovation with oversight.
Yet the BOK’s latest recommendation signals a preference for a more restrictive approach, at least during the early stages of regulatory implementation.
International comparisons also shape the policy debate. The European Union’s Markets in Crypto-Assets (MiCA) regulation permits licensed non-bank firms to issue stablecoins under defined supervisory standards. Japan, meanwhile, allows certain trust companies to participate alongside banks. South Korea’s central bank appears inclined to adopt a narrower model, at least initially.
The BOK’s stance highlights broader structural questions: Should stablecoin issuers function as extensions of the banking system, or as independent fintech actors operating under specialized regulation? The answer may influence not only domestic innovation but also cross-border interoperability and capital flows.
Implications for digital asset policy
If lawmakers adopt the BOK’s recommendation, stablecoin issuers in South Korea would be restricted to licensed commercial banks, potentially making the country one of the more conservative jurisdictions in this area.
Proponents argue that such a framework would enhance consumer confidence and reduce systemic risk, especially as stablecoins gain traction in payments and decentralized finance applications.
Critics caution that limiting stablecoin issuers too narrowly could slow competition and technological development. They note that fintech firms often drive product innovation, while banks may proceed more cautiously in launching new digital services. The outcome of the debate will likely shape South Korea’s position in the global digital asset ecosystem.
For now, the central bank’s message is clear: stablecoin issuers must operate within a framework that prioritizes AML compliance, reserve transparency, and financial stability. As legislative deliberations continue, policymakers will need to balance those safeguards against calls for market dynamism.
The discussion also reflects a broader global recalibration in digital asset regulation. Central banks worldwide are grappling with how to supervise stablecoin issuers without stifling innovation. South Korea’s approach, once finalized, may serve as a reference point for other advanced economies navigating similar tensions.
The coming months will determine whether lawmakers align fully with the BOK’s bank-only model or adopt a hybrid framework that broadens eligibility for stablecoin issuers under stringent conditions. Either path will signal how the country intends to integrate private digital currencies into its regulated financial system.
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