Main authorized and monetary consultants have cautioned political leaders that stablecoin adoption plans pose a hazard to the South Korean financial system.
Per the newspaper Chungnyun Ilbo, consultants say that US dollar-based stablecoins might have an effect on trade charges and fiat currencies.
Stablecoin Hazard for South Korean Financial system?
The feedback got here at a digital assets-themed assembly of the Korea Financial Affiliation on the FKI Tower Convention Middle in Yeouido, Seoul, on Might 19.
An professional panel expressed considerations concerning the attainable proliferation of dollar-based stablecoins in South Korea.
The panel argued that stablecoin utilization would cut back the amount of won-based funds made by each people and firms in South Korea.
It additionally claimed that the central Financial institution of Korea (BOK) might undergo consequently. The BOK, consultants mentioned, might lose the power to handle cash provides or intervene within the international trade markets.
The BOK has made comparable statements in current days, in response to stablecoin-related manifesto pledges from the main presidential candidate Lee Jae-myung.
Seoul shares open decrease following US sovereign score downgrade#Kospi #Kosdaq #shares #updateshttps://t.co/FunyOCTXIP
— The Korea Herald 코리아헤럴드 (@TheKoreaHerald) Might 19, 2025
KRW Stablecoin on Political Agenda
Lee Jae-myung has pledged to launch a KRW-pegged stablecoin if he’s elected President on June 3. Members of his occasion, the Democratic Occasion, have additionally argued that monetary regulators – and never the BOK – ought to have the ultimate say on stablecoin issuance.
However others wish to use present stablecoins of their adoption drives. They declare that failing to undertake is hampering Seoul’s tech competitiveness.
These advocates favor permitting South Korean companies and funds firms to work with high-cap stablecoins like USDT and USDC.
Nonetheless, Lee Seung-seok, a senior researcher on the Korea Financial Analysis Institute, warned:
“If dollar-based stablecoins change into established as a method of fee in South Korea, this might result in structural modifications within the received/greenback trade charge dedication mechanism. Alternate charges might soar as a result of a drop in KRW demand and a rise in demand for international foreign money.”
The researcher added that dollar-based stablecoins permit for fast capital mobility. He added that their decentralized nature “might end in large-scale capital outflows within the occasion of a disaster.”
Kim Hyo-bong, a former Monetary Supervisory Service official, mentioned that Washington and Brussels have been each more likely to launch stablecoin laws in 2025. Kim mentioned:
“South Korea also needs to be certain that it acts consistent with international traits.”
Kang Tae-soo, a visiting professor on the KAIST Graduate Faculty of Finance and a BOK Financial Coverage Committee member, mentioned that stablecoins supply companies benefits within the fee and settlement areas.
However Kang concurred that stablecoins have been troublesome to manage. He mentioned they may sow uncertainty within the financial and international trade coverage sectors.
The tutorial argued that the BOK and the federal government wanted to make sure adoption drives “reduce negative effects and maximize benefits.”
Nonetheless, others warned in opposition to the hazards of over-regulation. Namgung Joo-hyun, an Affiliate Professor of Business Legislation at Sungkyunkwan College, mentioned that the “international digital asset paradigm is quickly altering.” He mentioned:
“We should take steps to make sure South Korea doesn’t find yourself remoted as a result of extreme laws. We have to set up a monetary framework that gives each worldwide consistency and industrial competitiveness.”
International direct funding in Korea fell 4 notches in 2024 from a yr earlier, rating seventeenth among the many world’s prime 30 economies, information from the Financial institution of Korea (BOK) confirmed Sunday.https://t.co/9oKM5UHpu1 pic.twitter.com/TWGwKHda7x
— The Korea Instances (@koreatimescokr) Might 18, 2025
A Struggle of Phrases
In the meantime, the presidential candidates’ stablecoin confrontation continues. Throughout the first televised debate between the 4 main candidates for the June 3 ballot, Lee Jae-myung reiterated his dedication to launching a KRW-pegged coin.
However EToday reported that Lee Jun-seok, of the rival Reform Occasion, challenged the frontrunner on the matter.
Lee Jae-myung refuted Lee Jun-seok’s problem, claiming that “stablecoins based mostly on fiat received collateral are secure.”
Nonetheless, Lee Jun-seok claimed that there have been “no use circumstances” for any form of stablecoins that use a peg apart from the USD.
He continued, explaining that USDC and USDT, mixed, “account for 90% of the stablecoin market.” Lee Jun-seok requested the frontrunner what measures he would take “to stop the unlawful circulation of stablecoin funds, similar to remittances to North Korea.”
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