South Korea Considers Virtual Asset Issuance as Stablecoin Prospects Remain Unclear

South Korea Explores New Framework for Virtual Asset Issuance

During the recent Asian Financial Forum, Bank of Korea Governor Lee Chang-yong revealed potential shifts in South Korea's approach to virtual asset regulation. He highlighted ongoing discussions around allowing Korean residents to invest in foreign-issued virtual assets and establishing a new registration framework for domestic institutions to issue similar products.

Stablecoin Debates and Potential Use Cases

Lee noted that stablecoins backed by the Korean won could primarily facilitate cross-border transactions, while tokenized deposits may find greater utility in domestic payments. However, stablecoins continue to face regulatory and operational challenges that remain unresolved.

Outlook for CBDC and Payment Systems in South Korea

Given the maturity of South Korea's existing fast payment systems, retail central bank digital currency (CBDC) may not offer significant advantages. Nonetheless, the central bank intends to advance its strategy through multiple pilot projects involving tokenized deposits and wholesale CBDC to preserve the integrity of the two-tier financial system.