South Korea’s central bank has taken a firm stance this week, urging financial regulators to restrict the issuance of Korean won–denominated stablecoins exclusively to licensed commercial banks, a move aimed at tightening oversight and reducing risks tied to money laundering and broader financial instability.
The Bank of Korea (BOK) shared its recommendation in a report submitted to the National Assembly on February 23, 2026, arguing that limiting stablecoin issuance to regulated banks provides the strongest safeguard against illicit finance and systemic disruption.
The proposal reflects growing caution after troubling incidents in the domestic crypto market, including a recent faulty $40 billion Bitcoin transfer by exchange Bithumb, which intensified scrutiny of unregulated digital assets.
Key Takeaways
- Only licensed commercial banks in South Korea will be allowed to issue won-backed stablecoins to reduce money laundering and financial risks.
- Banks must hold the reserves behind these stablecoins, ensuring regulatory oversight and monetary stability.
- The Digital Asset Basic Act mandates that banks hold a controlling stake in stablecoin issuers, providing a legal framework for safe adoption.
- While some fear restrictions may limit fintech innovation, regulators believe the rules increase public trust and market legitimacy.
Bank‑Led Stablecoins: Stability Over Speed
Under the central bank’s recommendation, only licensed commercial banks—institutions already subject to capital adequacy, liquidity, and anti‑money‑laundering (AML) rules—would be permitted to issue stablecoins pegged to the Korean won.
The BOK’s logic is straightforward: banks already operate under a high level of regulatory supervision and have established systems to monitor compliance, making them better positioned to manage reserve backing and redemption obligations.
Officials also warned that widespread issuance by non-bank entities could complicate monetary policy transmission and potentially enable circumvention of existing foreign exchange controls. Stablecoins, by design, facilitate rapid cross‑border transfers; in the hands of lightly regulated issuers, they could pose a conduit for illicit capital flows.
Building on the Digital Asset Basic Act
The Bank of Korea’s recommendation gears up with broader legal changes unfolding in Seoul. The Digital Asset Basic Act, expected to take shape in early 2026, reportedly mandates that banks must hold a controlling stake—often suggested to be around 51% or more—in any entity issuing won‑based stablecoins.
This provision is part of a framework that seeks to clarify roles and responsibilities in the stablecoin market while preventing unregulated players from undermining financial safeguards.
While the act has faced delays amid regulatory debates over issuer eligibility, its direction remains clear: Seoul prefers a bank‑centric model that embeds stablecoin issuance within the existing financial regulatory perimeter.
Industry Reaction: Innovation vs. Regulation
The central bank’s stance has stirred debate among crypto advocates and industry stakeholders.
Proponents of broader fintech participation argue that restricting issuance to banks could dampen innovation and raise barriers for startups eager to build novel payment solutions on blockchain infrastructure. Fintech firms, they say, bring agility and technological depth that traditional banks may lack.
On the other side, many regulators and industry observers see merit in a cautious rollout. Clear rules and rigorous oversight can bolster public confidence and protect consumers, particularly in a space that has seen significant losses from hacks and operational errors.
Supporters also note that banks can still innovate through partnerships with technology firms, preserving competitive momentum while reinforcing trust.
Looking Ahead
South Korea’s approach underscores a broader global conversation about how to integrate digital currencies into mainstream finance without compromising stability.
By placing initial issuance in the hands of banks, the Bank of Korea aims to balance innovation with risk management, offering a model other nations might reference as they shape their own stablecoin policies.
As lawmakers refine the Digital Asset Basic Act and related crypto regulations, market participants will be closely watching how these rules influence the future of won‑based stablecoins and the country’s role in the global digital asset ecosystem.
