Bank of Korea Proposes Stricter Rules for Won-Pegged Stablecoins

The Bank of Korea (BOK) has urged stronger regulations for issuers of won-based stablecoins, recommending that reserve assets be deposited directly at the central bank. This proposal, revealed in documents submitted to the National Assembly’s finance committee on October 1, comes ahead of the government’s first draft bill on stablecoin regulation expected later this month.

Under the proposal, the BOK emphasized that mandatory central bank deposits could mitigate risks from sudden redemption surges and unchecked growth in money supply. Stablecoin issuers currently profit by investing reserves in risk-free assets such as government bonds. Redirecting those reserves into central bank deposits would limit profits to policy rate returns but provide stronger user protections.

The BOK cited global examples, including the U.S. Federal Reserve, which pays interest on deposits but restricts stablecoin issuance to approved entities. By requiring deposits at the central bank, Korea aims to bring stablecoins closer to traditional financial systems, ensuring redemption certainty and reducing systemic risks as adoption expands.

The central bank also proposed a full reserve model, requiring issuers to hold 100% of their liabilities in safe assets. This approach, similar to prepaid payment instruments, would protect against mass redemptions or a “coin run.” A policy council would determine eligible reserves, while the government would refine rules through presidential decrees.

On issuance, the BOK suggested that only bank-led consortia with strong compliance records should initially issue stablecoins. Broader issuance could follow once regulatory safeguards are proven effective. Policymakers believe this cautious rollout will reduce risks of regulatory arbitrage and financial industry disruption.

The Financial Services Commission plans to release the official legislative draft in October, a move that will clarify Korea’s position in the global race to regulate stablecoins. If adopted, the proposal could reshape Korea’s digital asset landscape, balancing stability with innovation.