South Korea’s central bank will participate in the creation of the stablecoin regulation

In this way, the central bank seeks to reduce risks to financial stability and the effectiveness of monetary policy

21.04.2025 - 16:00

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What’s new? The Bank of Korea intends to actively participate in the development of a regulatory framework for stablecoins to mitigate financial risks. “Unlike general virtual assets, stablecoins inherently possess characteristics of a payment measure. If their usage expands, they could … undermine the effectiveness of monetary policies,” the central bank said in its report.

Material by The Block

What else is known? The central bank also pointed out that stablecoins could transfer risks from cryptocurrency crises to the traditional financial market, threatening financial stability and the integrity of payment and settlement systems.

South Korea is currently developing a follow-up legislative framework for its first cryptocurrency law, which will come into effect in July 2024, it aims to protect crypto investors by imposing stricter requirements on exchanges.

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The second bill aims to establish a regulatory framework for stablecoins and provide a clearer classification for crypto service providers, as well as rules for more transparent listing and disclosure of tokens.

Earlier, the Financial Services Commission (FSC) announced that it would begin drafting legislation in the second half of this year.

The central bank report said that as of December 2024, there were 18,25 million crypto investors in the country, or over 35% of the total population. The average daily trading volume on the country’s five largest exchanges was $12,1 billion.

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In parallel, the central bank is testing a national cryptocurrency (CBDC) with citizens, retailers and local banks to determine its commercial viability.

Local media reported that the central bank’s planned second phase of testing, scheduled for October, will examine peer-to-peer (P2P) CBDC transfers.

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