South Korea’s Democratic Party leader Lee Jae-myung proposes creating a stablecoin pegged to the Korean won

Lee Jae-myung, the Democratic Party leader, proposed creating a stablecoin tied to the Korean won to prevent capital outflows and strengthen national financial sovereignty.

South Korea’s main opposition Democratic Party leader Lee Jae-myung has proposed creating a stablecoin pegged to the Korean won to prevent capital outflows and strengthen national financial sovereignty.

Speaking during a recent policy discussion, Lee argued that a won-based stablecoin would allow South Korea to retain wealth domestically while reducing reliance on foreign-issued digital assets like Tether (USDT) and Circle (USDC), reports The Korea Herald.

Currently, South Korean law prohibits the issuance of domestic stablecoins, forcing local exchanges to use US dollar-based alternatives. Between January and March, crypto exchanges in the country saw 56.8 trillion won ($40.8 billion) in asset outflows, with nearly half linked to foreign stablecoins.

“We need to establish a won-backed stablecoin market to prevent national wealth from leaking overseas,” said Lee.

The proposal is part of Lee’s broader digital asset strategy, which includes legalizing spot cryptocurrency exchange-traded funds (ETFs). Both Lee and rival Kim Moon-soo of the ruling People Power Party have pledged to support the introduction of spot crypto ETFs.

Lee’s campaign also calls for allowing the National Pension Fund and other institutional players to invest in cryptocurrencies once price stability criteria are met. To facilitate this, he proposed an integrated monitoring system and lower transaction fees, making crypto more accessible under government oversight.

However, economists have expressed concern over the potential for stablecoins to inflate the money supply and shift monetary control to private issuers.

“We must not overlook the economic principles behind them. Stablecoins are essentially another form of banking, creating money out of nothing,” said senior Korea Capital Market Institute researcher Shin Bo-sung.

The Democratic Party is also setting up a ‘Digital Asset Committee’ to develop cryptocurrency policies and promote industry growth.

The committee, which held its inaugural meeting on May 13 at the National Assembly Members’ Hall in Seoul, will focus on resolving regulatory uncertainty and addressing issues like stablecoin regulation.

This new committee adds to existing organizations in South Korea, including the Virtual Asset Committee launched in late 2024 and another public-private crypto task force introduced in 2022, both initiated by the Financial Services Commission (FSC).

The Democratic Party is set to introduce the Digital Asset Basic Act, which would establish a legal framework for cryptocurrencies and stablecoins, requiring issuers to hold at least 50 billion won in reserves and gain approval from the FSC.