- Stablecoin: A type of cryptocurrency designed to maintain a stable value by being pegged to a traditional currency, like the US dollar or Korean won.
- Deposit token: A new kind of stablecoin issued and controlled by a central bank, aiming to merge the trust of traditional finance with blockchain innovation.
- Asset outflows: When money or investments move out of a country or market, often due to better opportunities or fewer restrictions elsewhere.
- Public blockchain: A blockchain network that is open to anyone, like Ethereum or Bitcoin, where anyone can participate in transactions or validation.
South Korea’s central bank has just embarked on a pioneering study into the marriage of deposit tokens with public blockchain networks.
Bank of Korea Vice Governor Lee Jong-ryeol shared a big idea at the Blockchain Leaders Club event. He sees a future where government-backed digital money and private stablecoins can work together smoothly.
This plan is an important step in the world of digital currency. It introduces something new called deposit tokens, a type of stablecoin that’s controlled by the central bank. These tokens aim to combine the safety of traditional banking with the benefits of blockchain technology.
Last week, Lee Jae-myung, leader of South Korea’s Democratic Party, proposed the introduction of a stablecoin pegged to the Korean won to encourage domestic crypto investors to focus on the local market rather than overseas platforms. Currently, South Korean regulations prohibit the issuance of won-backed stablecoins, leaving local exchanges dependent on U.S. dollar-based alternatives.
To support this initiative, Lee proposed implementing an integrated monitoring system and reducing transaction fees, aiming to make cryptocurrency more accessible while ensuring government oversight. Crypto exchanges in South Korea recorded $40.8 billion in asset outflows, between January and March, nearly half of which were linked to foreign stablecoins, according to The Korea Herald.
As policymakers and industry leaders push for a more localized and regulated digital currency ecosystem, one key question remains: can South Korea balance innovation with control without stifling the very growth it’s trying to nurture?
