South Korean central bank eyes stablecoin risks despite payment promise

The Bank of Korea (BOK), South Korea’s central bank, is advising a cautious approach to the adoption of stablecoins, underscoring potential risks to financial stability while acknowledging their promise as a new form of payment, according to a recent report cited by local outlet Herald Business. The central bank pointed to several key concerns, including the risk of “coin runs”—digital asset equivalents of traditional bank runs—and vulnerabilities in the operational and payment structures of stablecoins. While the BOK sees potential in stablecoins, it recommended that their initial integration into the financial system be led by banks with well-established infrastructure. This, the bank said, would help contain systemic risks while allowing room to explore the benefits of the technology. The report also emphasized the need for regulatory frameworks that minimize risks to macroeconomic and monetary stability without stifling innovation in the crypto space.