BOK: Banks should issue won stablecoins, non-banks handle distribution

The Bank of Korea (BOK) has advised that banks should take the lead in issuing any future won-denominated stablecoins, while non-bank institutions should handle distribution as part of a consortium, the Herald Business reported. The recommendation came in a report published by the central bank on Oct. 27 concerning key issues for won-denominated stablecoins. The BOK stated that contrary to their purpose, stablecoins are sensitive to external shocks and exhibit high value volatility. The report highlighted concerns including the possibility of coin runs, gaps in consumer protection, conflicts with the separation of banking and commerce, the circumvention of capital and foreign exchange regulations, and the potential weakening of monetary policy and the banking system's intermediary function. The BOK emphasized that because the primary use of stablecoins is for payments, relevant legislation to permit and regulate virtual asset issuance should be prioritized.