Bank of Korea Raises Alarms on Stablecoin Depeg Risks
The Bank of Korea has issued a stark warning about the systemic risks posed by won-denominated stablecoins, urging banks to establish safeguards to protect monetary stability. Private issuers could undermine the nation's monetary control if left unchecked, the central bank cautioned.
Depegging events—where stablecoins fail to maintain their peg to the Korean won—are a key concern. Improper reserve management could trigger financial instability, echoing the 2022 collapse of TerraUSD. The BOK insists only regulated financial institutions should issue stablecoins.
South Korea's ruling Democratic Party is preparing regulatory responses. The MOVE reflects growing global scrutiny of stablecoins as digital assets increasingly intersect with traditional finance.
