Korea’s Won Stablecoin Stalls in Parliament While Its Central Bank Charts a Bank-Only Future

The Bank of Korea Has Made Its Choice, and It Is Not What Crypto Startups Wanted

South Korea’s central bank has spent years warning that privately issued stablecoins were a threat to monetary control. This month, it has flipped the script: the Bank of Korea now wants won-denominated stablecoins to exist, but on its own terms, with licensed banks holding the keys while parliament remains deadlocked over who should be allowed to issue them.

According to a CoinMarketCap report published on October 12, the Bank of Korea is pushing a bank-only won stablecoin model even as the country’s stablecoin legislation remains stuck in limbo. The central bank’s position, as reported by TokenPost the same day, is that private companies should be allowed to run stablecoin businesses, but the issuing framework would center on the banking sector rather than on crypto-native fintechs.

The timing is not accidental. Lawmakers have been haggling for months over the scope of a won stablecoin bill, and Forbes reported in late September that Korea still cannot agree on who should be allowed to issue one. In the meantime, an uncomfortable irony has emerged: Forbes found that the first stablecoin that Koreans could actually spend in everyday scenarios was Japanese, not Korean.

A Study That Cuts Both Ways

The Bank of Korea is backing its position with research. A study highlighted by CoinMarketCap on October 12 concluded that heavy demand for stablecoins can weaken local currencies, an argument the central bank has used to justify tight control over any won-pegged token. The concern is straightforward: if Koreans can easily hold digital dollars or digital yen, capital could flow out of the won during moments of stress, undercutting the central bank’s ability to manage the economy.

Yet the same institution has also signaled that it sees innovation value in the technology. Chosun Ilbo reported that Governor Shin Hyun-song has rejected a retail central bank digital currency and instead backs stablecoins, a notable shift for an institution that once treated the concept as a rival to its own monetary tools. The governor’s stance, according to the report, is that privately run stablecoins, properly licensed and supervised, are a better fit for Korea than a state-issued retail CBDC.

There is a limit to the openness, however. BigGo Finance reported on October 12 that the Bank of Korea plans to use only an institutional central bank digital currency for settling tokenized government bonds, explicitly excluding stablecoins from that pilot. In the central bank’s architecture, stablecoins are for the public-facing economy, while the core settlement layer stays in state hands.

Banks in, Startups on the Sidelines?

Not everyone is convinced that a bank-led model serves the country. The Korea Herald reported in early October that critics warn a bank-only won stablecoin framework risks limiting innovation, entrenching the same handful of financial conglomerates that already dominate Korean payments and leaving smaller fintech firms without a seat at the table.

The critique echoes a global debate. In the United States, the GENIUS Act framework has pushed stablecoin issuance toward regulated institutions with robust reserves. In Europe, MiCA rules have made banks and established electronic money institutions the natural issuers. Korea’s proposed bank-first approach would follow that same institutional drift, but with an added twist: the legislation that would actually authorize issuance has not passed, leaving companies in regulatory limbo.

That limbo has real costs. While Korean lawmakers debate, the domestic crypto market continues to run largely on dollar-pegged stablecoins issued abroad, which is precisely the currency-substitution outcome the Bank of Korea’s own study warns about. Every month of delay pushes Korean users further toward foreign-issued tokens that the Bank of Korea cannot supervise at all.

What Happens Next

Observers expect the legislative gridlock to break eventually, but the shape of the compromise remains uncertain. The central bank’s public position suggests it would accept privately issued won stablecoins only if banks lead issuance and the tokens circulate under strict supervision. Fintech advocates want a broader licensing category that would let non-bank issuers compete.

For Korean investors and businesses, the stakes are practical rather than theoretical. A won stablecoin would cut the cost of moving between the local currency and crypto exchanges, reduce dependence on dollar-pegged tokens, and open the door to tokenized deposits and on-chain payments in the domestic market. The Bank of Korea’s study is a reminder that there are trade-offs along the way, but its own leadership has now concluded that the answer is regulated issuance, not prohibition.

Until parliament acts, Korea’s won stablecoin remains a policy paper rather than a product, and the irony reported by Forbes stands: the world’s won has gone on-chain, but so far it needed Japanese help to get there.