Key Highlights
- The BOK recommends limiting won-denominated stablecoin issuance to commercial banks.
- The central bank’s renewed caution follows an incident where Bithumb erroneously distributed $40 billion in “ghost” Bitcoin.
- The BOK’s stance complicates President Lee Jae Myung’s deregulation agenda as lawmakers aim to submit a digital asset framework bill by late February.
The Bank of Korea’s (BOK’s) latest report emphasizes that stablecoins should remain within the “banking sector first.” In a report submitted to the National Assembly on Monday, the central bank underscored the necessity of leveraging the existing “gold standard” of banking regulations to prevent the burgeoning stablecoin market from undermining the nation’s financial integrity.
“It would be desirable to allow stablecoins primarily within the banking sector first,” the BOK stated, noting that non-bank entities could inadvertently help users bypass strict foreign exchange regulations.
According to a Bloomberg report, BOK also warned that allowing non-financial companies to issue tokens could violate the long-standing principle of separating industrial and financial capital.
The shadow of the ‘ghost Bitcoin’ incident
The central bank’s conservative approach gained significant momentum following the “ghost Bitcoin” episode at Bithumb, South Korea’s second-largest exchange.
Earlier this month, the platform accidentally credited $40 billion worth of nonexistent “ghost” Bitcoin to user accounts. While the error was eventually identified, the sheer scale of the phantom transfer exposed deep-seated vulnerabilities in the internal controls of non-bank digital asset providers.
While Bithumb has since recovered over 99% of the funds, the event exposed “structural weaknesses” in the internal ledgers of private exchanges.
If a major exchange can “create” $40 billion out of thin air through a technical glitch, the central bank argues that allowing non-bank entities to issue won-pegged stablecoins poses an unacceptable risk to monetary stability.
This lapse has provided regulators with the leverage to argue that non-bank institutions are not yet ready to handle the risks associated with minting stablecoins.
Institutional integrity and the “separation” principle
A core component of the BOK’s argument is the long-standing principle of separating financial and industrial capital. South Korean law is historically wary of allowing non-financial conglomerates (Chaebols) or tech giants to control banking functions.
The BOK warned that allowing non-bank entities to issue stablecoins could inadvertently allow these companies to bypass these restrictions, essentially functioning as banks without the attendant oversight.
Furthermore, the BOK highlighted the “foreign exchange” loophole. Currently, South Korea maintains strict controls on the movement of won across borders—regulations that banks are built to enforce.
The central bank fears that stablecoins issued by non-bank entities could become a primary vehicle for bypassing these capital controls, leading to sudden currency devaluations or uncontrollable capital flight.
Political and regional friction
The BOK’s firm position sets up a direct confrontation with President Lee Jae Myung’s administration, which had campaigned on a platform of broad crypto deregulation. However, the Bithumb scandal has made “deregulation” a politically sensitive word.
Han Jeoung-ae, policy committee chair of the ruling Democratic Party, now faces the difficult task of drafting a bill that balances the President’s pro-growth agenda with the central bank’s stability requirements.
With the bill set for submission this month, the final text will determine whether South Korea’s crypto market continues its retail-led “Wild West” growth or evolves into a bank-managed, institutionalized ecosystem.
South Korea’s cautious path mirrors similar trends across Asia. The BOK noted that other major financial hubs are adopting similarly high barriers to entry. The Hong Kong Monetary Authority recently established a “reasonably high bar” for stablecoin licenses in August 2025, and Japan has limited its current pilots to major megabanks, signaling a regional shift toward bank-led digital currency models.
Also Read: Democrats Vs. Trump: Stablecoin Regulation or Backend Deal for WLFI?
