South Korea's central bank says it should have legal authority over the approval of won-based stablecoins

The Bank of Korea, South Korea's central bank, said monetary authorities must be involved from the start if the country allows the issuance of stablecoins tied to the Korean won

South Korea's central bank has said it should have legal authority over the approval of won-based stablecoins and that they could disrupt monetary policy if they are treated like legal tender.

The Bank of Korea (BOK) said monetary authorities must be involved from the beginning if the country allows the issuance of stablecoins tied to the Korean won, BusinessKorea reported on Monday, citing a senior BOK official.

If won-based stablecoins are used like legal tender, they could complicate monetary policy operations, which would require the BOK’s involvement in the approval process, the official said in a statement.

Like in the U.S., where the Fed has “some authority in related legislation,” the BOK should also have "substantial legal authority" at the authorization stage when it comes to approving stablecoin issuers, the official added.

Earlier this year, Koh Kyung-chul, who leads the central bank’s electronic finance team, also said that stablecoins could affect how the BOK carries out monetary policy, manages financial stability, and oversees payments and settlements.

In early May, Democratic Party lawmaker Min Byung-duk said that nearly half of the cryptocurrencies sent overseas from South Korea’s major exchanges in the first quarter were dollar-based stablecoins, citing data from the Financial Supervisory Service.

According to Byung-duk, around 56.8 trillion won (around $40.6 billion) worth of cryptocurrencies were transferred overseas between January and March from five crypto exchanges: Upbit, Bithumb, Coinone, Cobbit, and Gopax.

Of this amount, 26.87 trillion won, or 47.3%, was in stablecoins like Tether (USDT) and USD Coin (USDC).