South Korea is on the cusp of a transformative era in its cryptocurrency landscape, propelled by the recent inauguration of President Lee Jae-myung and his administration's ambitious plans to invigorate the digital asset sector. Lee’s presidency signals a decisive shift towards fostering a robust digital economy, with a particular emphasis on establishing a Korean Won stablecoin market and integrating cryptocurrencies into mainstream financial frameworks.
Since early 2025, Lee has championed the need to reduce South Korea's reliance on foreign stablecoins, notably those pegged to the US dollar, by advocating for the development of a domestic stablecoin ecosystem. Stablecoins, which are cryptocurrencies tethered to stable assets like fiat currencies, provide a less volatile alternative to traditional cryptocurrencies such as Bitcoin and Ethereum. Globally, US dollar-backed stablecoins like Tether (USDT) and Circle's USDC dominate over 90% of the market, underscoring the pressing need for South Korea to carve out its own niche.
Lee's administration is not only targeting the creation of a Korean Won stablecoin but also plans to introduce cryptocurrency spot Exchange Traded Funds (ETFs) domestically. This move aims to offer investors a transparent and regulated avenue to engage with cryptocurrencies. If these initiatives succeed in stabilizing digital asset values, institutional investors, including the national pension fund, might be permitted to invest directly in cryptocurrencies under defined stability criteria, signaling a potential mainstream embrace of digital assets.
Central to these developments is the appointment of Kim Yong-beom as the Chief Policy Officer in Lee’s presidential office. Kim, a seasoned economic bureaucrat turned blockchain expert, has been at the forefront of blockchain and virtual asset research, notably as the head of Hashide Open Research, a think tank affiliated with South Korea’s largest blockchain investment firm, Hashide. His expertise and advocacy for stablecoins have raised expectations that the government will accelerate legislation and regulatory frameworks to support the burgeoning digital asset industry.
Kim has been vocal about the strategic importance of Korean Won stablecoins, emphasizing their role in preserving monetary sovereignty and countering the dominance of dollar-based stablecoins. In March 2025, he authored a report titled “Necessity and Legislation Proposal for Korean Won Stablecoins,” arguing that leveraging the strengths of a Korean Won stablecoin, while maintaining manufacturing competitiveness, could help South Korea maintain currency competitiveness on the global stage. At a seminar in May 2025, Kim stated, “We must quickly introduce institutionalized Korean Won stablecoins and directly design the structure to protect currency sovereignty.” He further highlighted that a well-designed Korean Won stablecoin could propel South Korea into a “Digital G2” status alongside the United States, exporting new digital financial orders.
However, these ambitions face significant headwinds, particularly from the Bank of Korea (BOK). Governor Rhee Chang-yong has expressed concerns that the issuance of Korean Won stablecoins by non-bank institutions could undermine the effectiveness of monetary policy and erode trust in the payment and settlement systems. At a press conference on May 29, 2025, Rhee warned, “If non-banking institutions issue Korean Won stablecoins at will, it could significantly undermine the effectiveness of monetary policy.” The BOK insists that any legal authorization of Korean Won stablecoins must ensure its involvement from the issuance approval stage to safeguard monetary stability.
Financial authorities are preparing for the second phase of virtual asset legislation, where stablecoin regulation is expected to be a pivotal topic. This legislative push is supported by members of the Democratic Party, such as Min Byeong-deok, who has introduced a Digital Asset Basic Act encompassing stablecoin issuance requirements. The Financial Services Commission is also reviewing international regulatory frameworks to inform domestic policy. One key question is whether blockchain companies and fintech firms will be permitted to issue Korean Won stablecoins, a prospect that clashes with the BOK’s cautious stance.
Beyond domestic policy, international developments are influencing South Korea’s digital asset environment. In the United States, regulatory dynamics are shifting. The US Senate is poised to vote on a stablecoin regulation bill, but coordination with the House of Representatives remains necessary. The House bill proposes stricter regulations on foreign stablecoin issuers operating in the US, requiring registration and compliance with US-like regulations. House Financial Services Committee Chair French Hill explained, “To issue stablecoins in the US, registration within the country is required; otherwise, issuance must occur in countries with similar regulations.”
Meanwhile, Michelle Bowman’s appointment as Vice Chair for Supervision at the Federal Reserve signals potential regulatory direction for stablecoin issuers, as she is expected to play a key role in shaping oversight policies. The US Securities and Exchange Commission (SEC) is also shifting its approach from enforcement to a more consultative process focused on notification and rulemaking, according to SEC Commissioner Paul Atkins.
The global stablecoin market continues to expand, with a market capitalization surpassing $250 billion as of early June 2025. Tether (USDT) leads with a $153 billion market cap, followed by Circle’s USDC at $60.9 billion, together accounting for over 85% of the market. Circle’s recent debut on the New York Stock Exchange was marked by a remarkable stock surge, with its share price jumping 180% on the first day of trading, reflecting robust investor interest.
In the private sector, major financial institutions and corporations are entering the cryptocurrency arena. Deutsche Bank is reportedly exploring the issuance of its own stablecoin and the introduction of tokenized deposits to enhance payment efficiency. Uber’s CEO Dara Khosrowshahi revealed that the company is researching the potential use of stablecoins for payment solutions, signaling growing corporate interest in cryptocurrency applications.
Investment strategies are also evolving, with Bitwise’s Chief Investment Officer Matt Hougan demonstrating that adding Bitcoin to traditional portfolios can improve returns while mitigating risk. The World Economic Forum forecasts the decentralized physical infrastructure network (DePIN) market, which combines blockchain and AI technologies, could exceed $3.5 trillion by 2028, underscoring the rapid technological convergence shaping the future of finance.
Domestically, South Korea’s cryptocurrency ecosystem is vibrant. WEMIX, a blockchain gaming platform, held an urgent meeting with holders after being delisted from domestic exchanges, announcing the 'Play On' project to integrate Web2 and Web3 gaming experiences. Bithumb is hosting its second 'Trading King' competition, incentivizing trading activity with escalating prizes. Meanwhile, Robinhood’s acquisition of crypto exchange Bitstamp for $200 million marks a strategic expansion into the global cryptocurrency market, targeting institutional investors.
Despite these promising developments, challenges remain. The Bank of Korea’s cautious position on stablecoin issuance by non-banking entities highlights the delicate balance between innovation and financial stability. Experts outside the central bank, such as Kim Ki-bong of the International Finance Center, warn of risks like a “coin run” if stablecoin reserve assets—such as US Treasury bonds—depreciate, potentially triggering market instability.
As South Korea navigates these uncharted waters, the interplay between government policy, regulatory oversight, and market innovation will determine the trajectory of its digital asset future. With President Lee Jae-myung’s administration poised to accelerate cryptocurrency integration and stablecoin adoption, the country could emerge as a significant player in the global digital economy—if it manages to reconcile innovation ambitions with prudent financial governance.
