South Korea’s central bank is set to establish a Virtual Asset Committee dedicated to monitoring the cryptocurrency market. This move highlights the country’s commitment to actively managing and overseeing digital asset developments.
The newly formed Virtual Asset Team will play a crucial role in engaging with legislative discussions concerning stablecoins and virtual assets. It will also collaborate closely with government authorities to support the legislative process ensuring comprehensive regulation.
This initiative follows banks in South Korea considering the introduction of stablecoins pegged to the national currency, the won. The push for stablecoin legislation by lawmakers significantly influenced the creation of this specialized team.
Additionally, the Bank of Korea has restructured and renamed its central bank digital currency (CBDC) research departments to better focus on developing practical digital currency business applications.
The Digital Currency Research Team was renamed the “Digital Currency Team” to emphasize its active role in exploring real-world digital currency initiatives beyond theoretical research. Other teams include the Digital Currency Technology Team, focusing on research, and the Digital Currency Infrastructure Team, which is working on a digital voucher management platform based on deposit tokens and developing a testing platform.
Although the Bank of Korea paused its retail CBDC test on June 29, citing support for local stablecoins and concerns over banking costs, discussions may resume once legal uncertainties are resolved. The CBDC test had been scheduled to run from April 1 to June 30, with earlier announcements made in November 2023.
The South Korean crypto market has gained strong support recently, including the election of Lee Jae Myung as president, who advocates for crypto-friendly policies such as allowing stablecoins and crypto exchange-traded funds.
Eight major South Korean banks have announced plans to introduce a stablecoin pegged to the won by late 2025 or early 2026. The Bank of Korea’s deputy governor, Ryoo Sangdai, expressed support for banks being the primary stablecoin issuers initially, with plans to expand issuance to other sectors gradually.
Overall, the Bank of Korea acknowledges the necessity of digital currencies in the future, regardless of their specific form, reflecting a strategic embrace of evolving financial technologies.
