"Nonbanks Should Also Be Allowed to Issue Won-Denominated Stablecoins"

Ryu Hongyeol, CEO of BDACS
"No single institution should monopolize all functions"
Issuance opportunities should be open to all... with stability rigorously ensured

Opinions were voiced that the issuance of won-denominated stablecoins should not be limited to banks, and that qualified fintech (finance + technology) companies and others should also be allowed to issue them. The view was that if only banks are allowed to issue stablecoins, the basis for trust will inevitably depend on the type of institution. Financial institutions and technology companies should each contribute their distinct expertise and complement one another as the won-denominated stablecoin market takes shape.

Ryu Hongyeol, CEO of BDACS, said at a seminar titled “Trust Infrastructure for Won-Denominated Stablecoins and Building a Safe Ecosystem,” hosted by Democratic Party of Korea Assemblywoman Kim Hyunjung at the National Assembly on the morning of November 12, “Stablecoins are fundamentally a matter of trust: ‘Can people use them with confidence?’” He added, “Such trust can be achieved not through the efforts of any one institution alone, but through innovation that enables issuance, reserve verification, and other functions to complement one another.”

Ryu Hongyeol, CEO of BDACS, delivers a presentation at the “Academic Conference on Issuing Won-Denominated Stablecoins and Building a Safe Digital Asset Ecosystem,” held at the National Assembly Members’ Office Building on the 12th. BDACS

Ryu said that discussions have focused solely on who should issue won-denominated stablecoins and that “the discussion needs to shift to how they are managed and verified.” He said the stability of won-denominated stablecoins can be ensured through the distribution of responsibilities by function and a system of mutual checks. Trust is established when issuance, reserve management, external audits, regulatory oversight, and technical support each operate independently and complement one another, he said. If all these functions are concentrated in a single entity, multiple risks could materialize, as seen in past incidents overseas. He also noted that limiting eligibility to issue stablecoins to banks would leave fintech companies and others outside the regulatory system and run counter to the trend in major overseas markets of allowing non-bank issuers.

He also said standards should be established in five areas to ensure operational stability: security, internal controls, compliance, reserve asset inspections, and incident response. He explained that an approach in which legislation sets out only general principles, while specific requirements are developed through industry self-regulatory standards and then incorporated into enforcement decrees and supervisory standards, would be better suited to responding to technological change.

Ryu stressed that, for won-denominated stablecoins to gain market trust, reserve asset management, control of issuance keys, and external verification mechanisms must be meaningfully separated. He put forward five policy recommendations: ▲ codify the requirement to deposit reserve assets with a third party; ▲ establish regulatory custody standards for issuance keys; ▲ specify detailed operational stability requirements; ▲ ensure proportional licensing and predictability based on capabilities; and ▲ allow qualified operators to issue stablecoins and apply differentiated circulation requirements according to their capabilities.

Meanwhile, attorney Han Seohee of Lee & Ko gave a presentation at the seminar titled “Legislative and Institutional Measures for Introducing Stablecoins.” “We need to clarify what infrastructure should be used when businesses need to receive dollar stablecoins as payment for trade in the future,” she said. “For won-denominated stablecoins, we need to design a distribution structure, such as allowing corporate accounts at virtual asset exchanges or creating accounts for payment purposes.” She also stressed the need to ease network separation requirements and establish blockchain security standards.

This content was produced with the assistance of AI translation services.