Today Bank of Korea (BOK) Governor Rhee Chang Yong addressed the National Assembly’s Planning and Finance Committee on stablecoins. The testimony comes amid reports that Circle’s President Heath Tarbert will visit Korea next month for meetings with banks. More on that later.
Governor Rhee told lawmakers he wants large companies, preferably banks, to be the first stablecoin issuers to ensure compliance with anti-money laundering rules, Yonhap News reported. A key reason for suggesting that banks go first is to avoid the proliferation of narrow banking, which could attract deposits away from commercial banks and reduce their ability to lend.
While Korea has relaxed many of its foreign exchange controls, there still isn’t free movement of currency overseas. “If a won-denominated stablecoin is issued without allowing capital liberalization and wealthy Koreans deposit it in overseas institutions such as Binance, it is the same as holding Korean won deposits overseas,” the Governor said, adding, “This issue must also be seriously considered as it can completely avoid capital regulations.”
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