With talks around won-denominated stablecoins heating up, the Bank of Korea has proposed setting up a policy body to regulate the issuance of the digital payment instrument.
In a recent submission to the policy planning committee under President Lee Jae Myung, the central bank suggested that any issuance of won-backed stablecoins should require consensus among relevant institutions, including the BOK itself.
While the BOK had remained wary over adopting a won-backed stablecoin, the committee has reportedly been pressuring the BOK to incorporate the digital asset.
“A pan-governmental regulatory response is necessary,” the BOK stated. “A policy body consisting of relevant authorities should be considered.”
The BOK cited the Stablecoin Certification and Review Committee under the US Genius Act as a precedent to support its stance. The bill, passed by the US Senate, stipulates that only deposit-taking institutions, or simply banking entities, approved by the Federal Reserve may issue stablecoins.
To ensure a thorough vetting process, public companies that are not primarily engaged in financial services, or non-banking entities, should obtain unanimous approval from the committee to issue stablecoins.
The proposal marks a turn from the BOK’s previous stance on stablecoins. The central bank had touted its pilot project for a central bank digital currency as a state-led alternative to private stablecoins, repeatedly citing concerns against the payment instrument in terms of operating monetary policy and foreign exchange rules.
But it recently backed down, putting the pilot test for tokenized deposit on a halt, citing “regulatory uncertainty.”
Though the two digital currencies are not mutually exclusive, the growing support for stablecoins could cast doubt on the CBDC’s role in digital payment landscape.
“Given this new demand, we definitely have to recalibrate the plan,” BOK Gov. Rhee Chang-yong said in a media interview earlier this month, referring to the momentum building up for won-denominated stablecoins.
silverstar@heraldcorp.com