Bank of Korea to Shape Legal Framework for CBDCs and Stablecoins

Bank of Korea (BOK) governor nominee Shin Hyun-song has identified Central Bank Digital Currencies (CBDCs) and deposit tokens as the primary foundations for South Korea’s future digital money system. This vision is expected to significantly influence the legislative direction of the country’s digital asset framework, particularly regarding the role of stablecoins.

Shin’s position emphasizes a system centered on CBDCs and deposit tokens, while he conditionally accepts regulated won-stablecoins only in a complementary capacity. This stance follows a history of questioning whether stablecoins are necessary for the financial ecosystem.

Legislative Framework and the Digital Asset Basic Act

On April 8, 2026, South Korea’s ruling Democratic Party proposed the Digital Asset Basic Act. This draft bill aims to establish a comprehensive legal framework governing the issuance, trading, custody, and supervision of digital assets.

The proposed legislation defines value-linked digital assets, which include those tied to fiat currencies or real-world assets. These assets would be subject to strict requirements, including:

• Mandatory issuer authorization
• Strict reserve standards
• Capital and operational requirements
• Refund reserves and redemption obligations

The proposal also introduces new mandatory withdrawal delays on domestic exchanges to combat fraud as part of a broader effort to tighten cryptocurrency regulations.

Regulatory Conflict Over Stablecoin Issuance

The development of the Digital Asset Basic Act has been marked by disagreements between regulators regarding the authorization of won-pegged stablecoins. The Bank of Korea has insisted that only banks with at least 51% ownership should be authorized to issue stablecoins.

Conversely, the Financial Services Commission has warned that such restrictive ownership requirements could hinder financial innovation.

The Bank of Korea has advocated for a distinct regulatory framework for stablecoins, citing their potential impact on monetary policy and financial stability. In a report released on April 21, 2025, the central bank noted that stablecoins possess inherent payment instrument properties.

If they become widely used as substitutes for legal tender, they could undermine the effectiveness of central bank policies, disrupt financial stability, and pose risks to payment systems. A separate regulatory framework is essential.

Bank of Korea Report, April 21, 2025

Lee Byung-mok, director of the BOK’s Financial Settlement Bureau, further cautioned that external shocks could threaten the stability of these assets. He noted that if a stablecoin loses its one-to-one peg with legal tender, it could trigger a rush of redemptions, forcing issuers to withdraw substantial reserves.

Market Context and Digital Trials

The push for a structured digital currency system comes as South Korea’s virtual asset market grows. As of December 2024, the five major virtual asset exchanges in the country reported 18.25 million investors with assets valued at 104.1 trillion won (approximately $76 billion), and an average daily trading volume of 17.2 trillion won.

The Bank of Korea attributed this growth to several global factors, including the approval of spot cryptocurrency ETFs in Hong Kong and the United States, the European Union’s Markets in Crypto-Assets (MiCA) Regulation, and increased trading activity following the election of U.S. President Donald Trump.

To support the transition toward a digital money system, Project Hangang trials are currently expanding. Through these trials, banks are testing the implementation of CBDCs and deposit tokens.