Kaia Chair Criticizes South Korea's Bank-Led Stablecoin Strategy
Luisa Crawford Oct 29, 2025 16:43
Kaia DLT Foundation chair Dr. Sangmin Seo critiques South Korea's plan for banks to lead stablecoin issuance, citing a lack of logical foundation. Calls for clear regulations for all issuers.
The recent decision by South Korea's central bank to prioritize banks in the issuance of stablecoins has met with criticism from Dr. Sangmin Seo, chair of the Kaia DLT Foundation. According to a report released by the Bank of Korea (BOK), the central bank believes that banks, being already subject to stringent regulations, are best positioned to minimize the risks associated with introducing stablecoins. However, Dr. Seo argues that this approach lacks a logical foundation.
Criticism of Bank-Led Approach
Dr. Seo suggests that the Bank of Korea should create clear and comprehensive rules for all stablecoin issuers, whether they are banks or non-banking institutions. He believes that such regulations would not only mitigate monetary risks but also foster innovation by allowing diverse institutions to compete and demonstrate their strengths. Seo's critique is rooted in the belief that relying solely on banks could stifle innovation and limit the broader adoption of stablecoins.
Call for Inclusive Regulations
Dr. Seo further emphasizes the need for the BOK to provide guidelines that clearly outline how risks can be mitigated and what qualifications are necessary for issuers to be deemed trustworthy. He argues that this would create a more level playing field, encouraging a wider range of participants to enter the stablecoin market.
Concerns Over Stablecoin Yield Ban
Another contentious issue raised by the BOK is the proposed ban on interest payments for stablecoins. The central bank argues that allowing yields could compete directly with traditional bank deposits, potentially disrupting the sector. However, Dr. Seo warns that an outright ban could hinder the utility and adoption of stablecoins, suggesting instead that supplementary yield creation should be permitted to enhance their attractiveness to users.
South Korea's Expanding Stablecoin Market
Despite these debates, the stablecoin market in South Korea is gaining momentum. Several major South Korean banks have announced plans to launch stablecoins pegged to the Korean won, with expected rollouts in late 2025 and early 2026. Additionally, Naver Financial, a fintech arm of the tech giant Naver, is reportedly moving towards acquiring Dunamu, the operator of Upbit, South Korea’s largest cryptocurrency exchange. This acquisition could pave the way for a new Korean won-backed stablecoin project.
The South Korean crypto sector has been buoyed by a favorable regulatory environment under the leadership of President Lee Jae-myung. Since his election, President Lee has supported various crypto-related initiatives, including legislation to legalize stablecoins. As the stablecoin landscape evolves, the call for balanced and inclusive regulations becomes increasingly pertinent.
For more information, you can read the original article on Cointelegraph.
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