South Korea central bank governor has expressed cautious openness to the idea of a won-backed stablecoin but raised concerns about its potential impact on the country’s foreign exchange (forex) reserves. According to a Reuters report published Wednesday, Bank of Korea Governor Rhee Chang-yong said issuing a won-denominated stablecoin could unintentionally drive up demand for dollar-based stablecoins, complicating the country’s efforts to manage its forex balance. “Issuing won-based stablecoin could make it easier to exchange them with dollar stablecoin rather than working to reduce use of dollar stablecoin,” Rhee said during a press conference. “That in turn could increase demand for dollar stablecoin and make it difficult for us to manage forex.” The comments come at a sensitive time for South Korea’s economy. Data from the Bank of Korea shows that the nation’s forex reserves dropped by $11 billion in just six months — from $415.6 billion at the end of December 2023 to $404.6 billion at the end of May 2024. South Korea President Lee Advances Pro-Crypto Regulatory Framework Rhee’s remarks follow a broader national shift toward crypto innovation under South Korea’s newly elected president, Lee Jae-myung. Fulfilling campaign promises, President Lee’s administration is actively pursuing regulatory reforms to establish South Korea as a more crypto-friendly jurisdiction. On June 10, the ruling Democratic Party introduced the Digital Asset Basic Act. The bill proposes allowing firms with at least $368,000 in equity to issue stablecoins, provided they maintain adequate reserves to support redemptions and receive approval from the Financial Services Commission (FSC). The FSC is also reviewing the fee structures of local exchanges as part of Lee’s initiative to reduce trading costs, especially for younger retail investors. These regulatory moves aim to promote local stablecoin alternatives while safeguarding against financial instability and capital outflows. Global Stablecoin Market Still Dollar-Dominated Globally, the stablecoin market remains heavily skewed toward U.S. dollar-backed tokens. Tether (USDT) leads with a market cap of $156 billion, followed by Circle’s USD Coin (USDC) at $61 billion, according to DefiLlama. Still, alternatives are gaining ground. Circle’s euro-backed stablecoin, EURC, has seen a surge in interest, with its market cap rising 156% since the start of 2024 to reach $203 million. Circle’s momentum received an additional boost after U.S. lawmakers signaled likely approval of the GENIUS Act — a bill aimed at regulating the stablecoin industry. The post Bank of Korea Chief Open to Won-Based Stablecoin Amid Forex Concerns appeared first on TheCoinrise.com .
