• Regulations & Compliance
  • Institutional Adoption

Bank of Korea Steps Up Stablecoin Regulation

4/22/2025
3min read
Denislav Manolov's Image
by Denislav Manolov
Crypto Expert at Airdrops.com
4/22/2025
3min read
Denislav Manolov's Image
by Denislav Manolov
Crypto Expert

Bank of Korea Warns: Stablecoins Could Undermine Monetary Policy

The Bank of Korea (BOK) has officially joined South Korea’s push to regulate stablecoins, citing rising concerns over their potential to destabilize the nation's financial system. Unlike traditional cryptocurrencies, stablecoins are pegged to fiat currencies like the U.S. dollar, making them more appealing for everyday transactions — but also more dangerous if left unchecked. The BOK flagged that widespread stablecoin adoption could erode its ability to manage inflation and control interest rates, critical tools for steering South Korea’s economy. If stablecoins become a dominant payment method, the central bank fears losing its grip on monetary policy, which could expose the economy to unexpected shocks.

"Stablecoins threaten to destabilize South Korea’s monetary framework by reducing the central bank’s control over economic conditions," warned the BOK.

Financial Instability and Payment System Risks

Beyond monetary policy, the BOK pointed to financial instability risks. A sudden loss of confidence in stablecoin value could spark mass withdrawals, triggering liquidity crises across the banking sector. The dangers don’t stop there — issues like poor reserve management, cybersecurity threats, and system malfunctions could amplify the fallout. The central bank also highlighted concerns that stablecoins could fragment South Korea’s efficient payment infrastructure. If digital assets overtake traditional payment rails, it could weaken existing systems, making transactions less secure and cohesive.

South Korea’s Next Phase of Digital Asset Laws

In response, the BOK is joining the second phase of South Korea's digital asset legislative rollout, building on the Virtual Asset User Protection Act adopted in July 2024. The upcoming laws will introduce stricter rules for stablecoin issuers, focusing on:

  • Transparency in operations.
  • Stronger security standards.
  • Clearer token listing requirements.

These measures aim to safeguard users while supporting the orderly growth of South Korea’s expanding digital economy.

Cross-Border Stablecoin Monitoring & CBDC Developments

South Korean regulators are also ramping up surveillance on cross-border stablecoin transactions, especially those tied to the U.S. dollar. The Ministry of Economy and Finance is working on applying foreign exchange regulations to prevent illicit flows and ensure financial stability. 

Meanwhile, the BOK isn’t just focused on stablecoins. It’s preparing for the second phase of its central bank digital currency (CBDC) pilot, set to launch in October 2025. This phase will test real-world peer-to-peer transactions between banks, retailers, and consumers, aiming to better understand how a CBDC could function within South Korea’s economy. The BOK’s dual approach—tightening stablecoin regulations while advancing CBDC development—signals its commitment to financial security in a rapidly evolving digital landscape.

Setting Global Standards for Stablecoin Regulation

With stablecoins emerging as a major financial risk, the Bank of Korea is positioning itself as a leader in crafting regulatory frameworks that could influence global standards. Its proactive stance aims to balance innovation with stability, ensuring that digital assets enhance, rather than threaten, the country’s financial future.

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