South Korea is taking a big step in its digital currency plans by moving to legalize stablecoins tied to the Korean won. Backed by newly elected President Lee Jae Myung, the idea is to cut down the country’s dependence on foreign currencies especially the U.S. dollar, and position South Korea as a key player in Asia’s digital finance space.
President Lee’s team is now focused on removing the current ban on won-based stablecoins and setting up clear rules so private companies can issue them safely, with proper checks in place. The goal, officials say, is to strengthen South Korea’s economic independence and support cross-border trade using domestic digital assets.
Leading the policy charge is lawmaker Min Byeong-deok, who served as President Lee’s digital assets chief during the campaign. Earlier this month, Min introduced draft legislation designed to set ground rules for stablecoin issuers, including mandatory licensing and full transparency around reserves.
“The use of dollar stablecoins is directly linked to the outflows of capital,” Min said in an interview. Won-based alternatives can reduce those outflows and help lower trade-related costs.
He added that stablecoins denominated in won could be particularly useful for sectors like e-commerce, gaming, and content creation — areas where South Korean companies are already expanding internationally.
Twitter user bonghyeon stated, “Stablecoins match the demand for government bonds in that currency … No one is buying Korean won bonds.”
The private sector appears to be on board. KakaoPay, one of the country’s most widely used mobile payment platforms, recently filed for patents related to stablecoin use.
Analysts say a won-backed stablecoin could also make travel and tourism transactions smoother by offering a low-cost alternative to currency exchanges and international wire transfers.
But not everyone is convinced.
Critics argue that stablecoins tied to the won won’t change the fact that the Korean currency lacks global demand. This isn’t going to make the won a world currency overnight, said Brian Hoonjong Paik, co-founder of digital asset firm SmashFi.
And there’s a real risk that speculative traders abroad could misuse these tokens, exposing the Korean financial system to new vulnerabilities.
Paik also raised red flags about how government oversight could turn these stablecoins into a form of state-controlled money, essentially a backdoor central bank digital currency. Instead, he urged the administration to look at alternatives like building a Bitcoin reserve, which he described as more transparent and less prone to manipulation.
Min pushed back on those concerns, stressing that stablecoin issuance would remain in the hands of private firms, not the central bank. “There’s a clear distinction between a CBDC and what we’re proposing,” he said. “This isn’t about surveillance, it’s about trust and global standards.”
The legislation comes at a time when South Korea is trying to reestablish itself as a leader in the digital asset space. After TerraUSD’s 2022 collapse stalled Korea’s crypto push, President Lee is reigniting it. His Digital Asset Basic Act would unblock crypto ETFs and create a presidential panel to steer the industry.
Some say the plan still lacks focus on decentralization and self-custody. Min agrees it’s a valid concern, but says the aim is to strike a balance, protecting investors without losing the open nature of blockchain.
With competition in digital finance rising globally, South Korea seems ready to make a serious comeback, and this time, won-backed stablecoins are at the center of it.
Also Read: South Korea Explores Won-Based Stablecoin Amid Forex Challenges
