Bank of Korea warns of stablecoin depegging risks, calls for banks to lead issuance

ChainCatcher reported that the Bank of Korea released a report on Monday warning about won-denominated stablecoins, emphasizing that private issuers lack the institutional trust required to maintain monetary stability, and suggesting that traditional banks should lead the issuance of stablecoins.

The central bank pointed out that monetary stability relies on trust rather than technology, and cited examples of stablecoin depegging risks, such as the Terra/Luna collapse and USDC dropping to $0.88 during the Silicon Valley Bank crisis. The report specifically emphasized that non-dollar stablecoins face even greater risks due to their limited circulation. Despite these warnings, financial innovation in Korea continues to advance. In September, digital asset custody provider BDACS partnered with Woori Bank to launch Korea's first fully compliant won-backed stablecoin, KRW1, which is built on the Avalanche blockchain.