In short
- The Financial institution of Korea is contemplating issuing deposit tokens on a public blockchain to coexist with non-public stablecoins.
- $19.5 billion price of stablecoins left South Korea in Q1 2025, prompting requires a won-backed various.
- Tech design isn’t sufficient to safeguard sovereignty, pointing to the necessity for sound fiscal coverage, in response to business consultants.
The Financial institution of Korea is contemplating linking its deposit tokens to a public blockchain, a transfer that may place its state-backed digital foreign money alongside private-sector stablecoins working on open networks.
The tokens will probably be “a sort of stablecoin issued throughout the digital foreign money system constructed and operated by the Financial institution of Korea,” the financial institution’s Deputy Governor Lee Jong-ryeol mentioned in a press release Decrypt has confirmed with native sources.
“We’re contemplating a path by which it would coexist throughout the total digital foreign money system together with stablecoins issued by the non-public sector,” the Deputy Governor mentioned on the eighth Blockchain Leaders Membership held on the Lotte Lodge in Jung-gu, Seoul on Monday.
Lee mentioned the initiative is being pursued from “a nationwide perspective” and falls beneath the Financial institution of Korea’s accountability as a financial and overseas change authority, in response to native information outlet News1 Korea.
The proposal has raised questions on how such a hybrid system would possibly operate throughout jurisdictions.
“It’s not clear how the hybrid mannequin of tokenized deposit plus private-sector stablecoin will essentially obtain the said function of defending financial sovereignty,” Peter Chung, head of analysis at Singapore-based algorithmic crypto buying and selling agency Presto Labs, informed Decrypt.
“Stablecoins on public blockchains will probably be free to cross borders,” Chung mentioned, noting that “the best way to guard financial sovereignty is just not by tinkering with token design or community structure, however via sound financial and monetary insurance policies.”
In the meantime, the Deputy Governor additionally raised issues over the rising use of world stablecoins in South Korea, calling their inflow “essentially the most regarding half.”
The official warned that utilizing them as foreign money substitutes might result in violations of financial sovereignty, weakened coverage controls, monetary instability, and elevated cash laundering dangers.
Within the first quarter of 2025, South Korea’s crypto exchanges transferred round $40.6 billion (56.8 trillion gained) price of digital property overseas.
Almost half, $19.5 billion (26.87 trillion gained), was in stablecoins comparable to USDT and USDC, in response to Maeil Enterprise Newspaper, a neighborhood information outlet.
The problem is gaining traction amongst South Korean political leaders as nicely. Democratic Celebration of Korea presidential candidate Lee Jae-myung has proposed launching a won-backed stablecoin to scale back capital outflows and reliance on dollar-denominated tokens.
The Financial institution of Korea can also be a part of the Agora Challenge, a cross-border settlement system with central banks from seven nations.
“It’s designed so {that a} nation’s deposit token can’t be used instantly in a foreign country,” Lee mentioned.
Globally, stablecoin utilization continues to rise. The overall market cap now stands at $249.6 billion, up 0.3% within the final 24 hours, per CoinGecko knowledge.
Edited by Stacy Elliott.
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