TLDR
- Bank of Korea suggests stablecoin issuers deposit reserves directly with the central bank.
- Proposed rules aim to prevent risks from redemption surges and unregulated growth.
- BOK backs a full reserve model, requiring 100% backing of stablecoin liabilities.
- South Korea plans legislation to regulate stablecoins and integrate them into payments.
The Bank of Korea (BOK) has proposed a new regulation that could reshape the future of won-based stablecoins. Under this proposal, issuers of stablecoins may be required to deposit their reserve assets directly with the central bank. The BOK’s goal is to reduce risks from sudden redemption surges and ensure tighter control over the growing stablecoin market. This move signals the central bank’s determination to manage the evolving sector more effectively.
Bank of Korea’s Proposal for Stablecoin Reserve Deposits
The Bank of Korea (BOK) submitted a proposal to the National Assembly’s finance committee on October 1, 2025, calling for stricter regulations regarding stablecoins. Specifically, the BOK suggests that stablecoin issuers should place their reserve assets directly at the central bank.
According to the BOK, this requirement would help mitigate risks such as rapid redemption requests, which could destabilize the financial system if not managed properly. The central bank believes that greater control over stablecoin reserves will enable it to monitor the money supply and prevent unchecked growth of digital assets outside its oversight.
In the proposal, the BOK explains that issuers of stablecoins currently profit by investing their reserve assets in safe, low-risk assets like government bonds. By redirecting reserves to the central bank, the BOK plans to cap the earnings of issuers to the policy rate level, ensuring that profits are more predictable and tied to official rates. This would limit opportunities for issuers to generate significant returns from their reserves while maintaining stability in the financial system.
A Shift Toward Full Reserve Requirements
In addition to requiring central bank deposits, the BOK also supports a full reserve model for stablecoins. This would mandate that issuers maintain 100% of their liabilities in safe, liquid assets, akin to the regulations for prepaid payment instruments. Such a model aims to protect users from the risk of sudden redemption requests and to ensure that stablecoins remain fully backed by secure assets.
The BOK is considering the creation of a policy council to determine what qualifies as an eligible reserve. This would allow the central bank to refine the rules over time, potentially through presidential decrees.
The BOK’s proposed full reserve model is designed to strengthen the stability of stablecoins and reduce the likelihood of a “coin run,” where users attempt to redeem their digital assets simultaneously, potentially causing widespread financial instability.
Impact on Stablecoin Issuers and the Market
If implemented, these changes could reduce the profitability of stablecoin issuance in South Korea. Issuers may face lower earnings due to the cap on reserve returns and the requirement to hold 100% backing for their stablecoins. This could discourage some non-bank entities from entering the market, as the stricter rules may make stablecoin issuance less attractive.
However, the BOK believes these measures are necessary to safeguard the financial system. The central bank emphasizes that aligning stablecoins more closely with traditional payment systems and ensuring they are fully backed by secure reserves will increase user confidence. This, in turn, will reduce the risk of financial instability as stablecoins become a more widely used form of digital currency.
Legislation and Future Outlook
The South Korean government plans to introduce its first draft bill on stablecoins in October 2025, which will outline the regulatory framework for won-pegged digital currencies. This bill is expected to provide more details on how the country intends to regulate the stablecoin market and integrate it into the existing financial system.
The BOK’s proposal and the upcoming legislation indicate South Korea’s commitment to regulating stablecoins in a way that balances innovation with financial stability.
With the global growth of digital assets, South Korea’s regulatory approach could serve as a model for other countries considering how to manage stablecoins. The final regulations will likely play a key role in shaping the future of stablecoins in South Korea and beyond.
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