- Korea has 18.25 million digital asset investors with total holdings of KRW 104.1 trillion.
- Bank of Korea warns stablecoins may disrupt monetary policy if widely used as fiat substitutes.
- Korea’s average daily digital asset trading volume reached KRW 17.2 trillion in 2024.
The Bank of Korea (BOK) expresses caution about the effects stablecoins may have on monetary policy and financial stability systems. Through its 2024 Payment and Settlement Systems Report, the central bank highlighted how extensive adoption of stablecoins as replacement currency would impact essential payment systems. The report insisted that an immediate, proper regulatory system should be developed to manage new developments.
Unlike standard digital assets, stablecoins enable direct payment transactions according to the BOK information. The payment function advantages of stablecoins set them apart from other digital assets and enhance their ability to become standard financial payment methods of the future. The central bank declared its commitment to participate in legislative processes determining its regulatory control.
Korea’s Expanding Digital Asset Market
The South Korean market for digital assets maintains an upward trajectory in its development. The provided data showed that 18.25 million South Koreans actively participate in the market, as reported by the report. The total asset volume for digital investments stands at KRW 104.1 trillion, while the daily market trading reaches KRW 17.2 trillion.
The sudden expansion of stablecoins demands immediate regulatory action because they are increasingly used as payment solutions. The Bank of Korea highlights that the transformation of stablecoins ensures future disruption of existing policy systems and regulatory frameworks. The banking institution demands preparatory actions to preserve financial security in response to rising adoption trends.
Global Regulation and Korea’s Policy Direction
Several leading regulatory bodies have put stablecoin regulatory mechanisms into effect. Each of the European Union, Japan and Singapore, together with Hong Kong, has created distinct rules for managing stablecoins, which Hong Kong will finalise its framework soon. Regulatory authorities have implemented these measures to address safety risks that have emerged from the fast growth of digital payment tokens.
South Korea needs to create a definitive policy about stablecoins because of growing international regulatory demands affecting the country. According to the BOK’s report, stablecoins required prompt regulatory action due to intensifying global competition, as these regulations needed alignment with worldwide standards. The document showed that stablecoin legislation will be critical in upcoming financial policy decisions.
Without presenting legislative details, the central bank encourages the development of a regulatory framework that fits stablecoins’ exceptional characteristics. The report emphasised that a thorough stablecoin response would require financial institutions to work with legislators and regulators as one unit.
