South Korea's central bank fights for stablecoin oversight

Coin Geek

a day ago

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South Korea's central bank is lobbying for more involvement in stablecoin regulations as the government ramps up its push to launch won-backed stablecoins.
The Bank of Korea (BOK) recently submitted a proposal to the government's policy planning committee to have all relevant financial watchdogs involved in overseeing any issuance of a won-backed stablecoin.
BOK proposed that a 'pan-governmental regulatory response is necessary. A policy body consisting of relevant authorities should be considered,' reports the Korea Herald.
The submission referenced the U.S. Stablecoin Certification and Review Committee, established under the new GENIUS Act. The committee reviews applications from interested issuers and recommends license approvals or denials. It's chaired by the Secretary of the Treasury, with the chairs of the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) as members.
If the BOK's proposal is adopted, it could give the central bank and any other member of the new committee the power to veto the issuance of a license to a stablecoin firm.
The proposal would also restore the BOK's oversight over stablecoins, which it stands to lose if a new draft bill sails through parliament. The bill hands jurisdiction to the Financial Services Commission (FSC), although a separate bill recommends that the FSC consult with the BOK on crucial stablecoin decisions.
The latest proposal signals a policy shift for the central bank, which has been against won-backed stablecoins for years. However, the President Lee Jae-Myung administration, which took over in June, has been pro-digital assets and has pressured BOK to align with its stance, local outlets say. Jae-Myung won the June snap election on campaign promises of transforming South Korea into a digital asset hub, with won-backed stablecoins among his key pledges.
The BOK also wanted stablecoin issuance to be relegated solely to banking institutions, but this stance is now changing as well.
In a recent interview with CNBC, Governor Rhee Chang-Yong noted that the regulator has received petitions from fintechs who want the issuance scope expanded beyond the regulated lenders.
'They [fintechs] have asked for the allowance of non-bank financial institutions to participate. Given this new demand, we need to recalibrate our plan,' he stated.
The top bank is concerned about the implications of won-backed stablecoins on the country's capital flow management, he added. Unregulated won stablecoins could 'expedite easier transfer to dollar-denominated stablecoins and undermine some of our policies.'
In some regions, like Europe, governments have promoted stablecoins pegged to local currencies to reduce dependency on the USD tokens. And while this would apply to South Korea as well, the governor worries that it might have the opposite effect by making it easier to convert won into USD tokens.
Meanwhile, South Korean lenders and major fintechs are rushing to become pioneers in the issuance of local stablecoins. Woori Bank, Kakao Bank, Kookmin Bank, the Industrial Bank of Korea, and more have all filed stablecoin-related trademarks. Google Finance (NASDAQ: GOOGL) data shows that the banks that applied for the trademarks had recorded a 20% increase in stock value. Kakao Bank, for instance, recorded a 19.3% rise in stock price the day after applying for the trademarks.
Hong Kong to issue fewer than ten stablecoin licenses
In Hong Kong, over 40 companies are set to be locked in a fierce competition for a limited number of stablecoin issuer licenses starting next month, local reports say.
Hong Kong's stablecoin regulations have been hailed as the most progressive globally, with the city-state welcoming the world's first dedicated stablecoin act in May. However, only a handful of companies will obtain the coveted license, Treasury Secretary Christopher Hui has revealed.
In an interview with a local outlet, Hui revealed that the number of licensed issuers will likely be 'in the single digits,' at least for this year.
The city's financial regulator, Hong Kong Monetary Authority (HKMA), will open the licensing application process on August 1, when the Stablecoin Ordinance officially takes effect. Over 40 companies have expressed interest in the license, but according to Hui, only a handful will be successful in their quest. Source: Wu Blockchain
Local reports say that the HKMA will prioritize the major financial and tech firms in Hong Kong and China, with startups and smaller firms set to miss out. Some of the giants expected to apply include China's Ant Group and JD.com (NASDAQ: JD) and a consortium comprising Standard Chartered (NASDAQ: SCBFF) and Animoca Brands.
Watch | Spotlight On: Centi Franc—the truly stable stablecoin
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