WON OR GONE ! STABLECOINS SPAWN ! BANKS MUST LEAD, OR RISK THE DAWN.
Banks Only or Open to All , Who Should Issue Stablecoins? South Korea is involved in a heated discussion over who should produce won-pegged stablecoins, as the central bank warns about serious currency concerns.
The financial community was taken aback when Bank of Korea Governor Lee Chang-yong warned that won stablecoins could undermine foreign currency stability and make capital flow management considerably more difficult.
Lee warned that stablecoins might be used for cross-border transactions and get around current capital control procedures while speaking at the Asian Financial Forum in Hong Kong. He warned that allowing stablecoins to be issued by non-banks could raise volatility and threaten the Korean won.
Lawmakers are divided. Some contend that in order to safeguard the financial system, only banks should spearhead the issue of stablecoins. Others in the sector want for a more expansive system that would allow tech firms and non-bank organisations to take part under close oversight.
The dispute has caused South Korea’s planned Digital Asset Basic Act to stall, postponing the development of precise regulations pertaining to digital assets.
A compromise is being considered by financial regulators, who propose bank-led organisations with little involvement from non-banks.
The politicians continue to discuss ownership caps, regulatory control, and issuance rights, progress is still sluggish.
Will dollar outflows worsen if stablecoins go unrestricted? The problem arises during a difficult period for the economy of South Korea. Due to trade tensions with the US, the won is under pressure, which raises worries about significant dollar withdrawals.
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