Korea Targets Stablecoin Issuance With Banking Restrictions

South Korea is taking a stricter approach to stablecoins. The Bank of Korea recently recommended that only licensed commercial banks issue won-denominated stablecoins. Officials say this move will prevent money laundering and protect the financial system. It follows high-profile hacks at exchanges like Bithumb, which exposed risks in unregulated digital assets. By limiting issuance to banks, Korea aims to control risk while still supporting growth in the crypto sector.

Bank of Korea Restricts Stablecoin Issuance

The Bank of Korea wants stablecoins backed by the won to be issued only by regulated banks. This approach helps reduce illegal activity and gives regulators better control over the market. Licensed banks must hold the reserves behind these stablecoins. Furthermore, the central bank believes that letting banks issue stablecoins will protect Korea’s monetary stability and prevent foreign firms from dominating the market.

Korea Builds on the Digital Asset Basic Act

This recommendation follows the Digital Asset Basic Act, finalized in early 2026. The law requires that banks own at least 51% of any won-backed stablecoin issuer. In addition, the act sets clear rules for stablecoins and ensures only trusted institutions handle public funds. Consequently, Korea provides a framework that encourages safe crypto adoption while limiting risks from unregulated players.

Community Debate: Innovation vs. Security

The Bank of Korea’s proposal has sparked debate. On one hand, fintech supporters argue that the rules could limit innovation and make it harder for startups to compete. On the other hand, many industry observers say the regulations add legitimacy and protect users. They note that banks can still innovate within this system. In fact, the new rules could encourage safe development while integrating crypto into the broader economy.

Regulatory Clarity May Boost Trust

With these recommendations, Korean regulators aim to create clear rules for stablecoins. Limiting issuance to banks could make the market safer and more predictable. Meanwhile, supporters believe this approach builds public trust in digital assets. By combining oversight with gradual adoption, Korea may serve as an example for other countries that want to balance innovation with financial security.