South Korea's central bank strengthens oversight of cryptocurrencies and prepares for the future

South Korea's central bank strengthens oversight of cryptocurrencies and prepares for the future

The Bank of Korea (BOK) is taking significant steps toward regulating and researching cryptocurrencies and digital currencies. As part of these efforts, it plans to establish a new virtual asset committee tasked with monitoring the cryptocurrency market, while also renaming its central bank digital currency (CBDC) teams to better reflect their practical and commercial focus.

New Virtual Asset Committee: How will it work?

An official from the Bank of Korea has announced that this new committee will be responsible for monitoring current discussions around stablecoins and other virtual assets. It will also participate in cooperation with government institutions in the creation of legislation. The main impetus for its establishment is the proposed legislation on stablecoins, which is increasingly being discussed in South Korea, and the interest of banks in using stablecoins pegged to the domestic currency, the won.

Cryptocurrencies in Korea: Popular and promising

South Koreans are enthusiastic users of cryptocurrencies, which is also reflected in the political environment. New President Lee Jae Myung, who was elected in April 2024, supported pro-cryptocurrency initiatives in his election campaign, including the authorization of stablecoins and crypto funds traded on exchanges. This shows that cryptocurrencies have a strong presence in Korea and are considered an important segment of future financial development.

Transformation of research teams and their practical focus

The Bank of Korea has also made fundamental changes to the structure of its research teams. For example, it renamed the team working on CBDC-related projects the "Digital Currency Team," emphasizing its practical role in implementing real-world solutions. Other teams have been divided into specialized sections that focus on digital currency technologies and the infrastructure needed to manage and test them. This move reflects the bank's intention to be an active player in the field of digital currencies, rather than just a passive observer.

CBDC testing postponed, but with the prospect of resumption

Testing of the central bank's digital currency (CBDC) was originally planned for the first half of 2024, but has been postponed indefinitely. The government has expressed support for stable coins in the domestic currency, while banks have expressed concerns about the costs of implementation. Governor Lee Chang-yong emphasized that South Korea needs a "digital currency in the future" and indicated that research and preparations for its introduction will continue once legal uncertainties have been resolved.

Stablecoins as a major trend

While the debate on CBDC is receding into the background, stablecoins are gaining in importance. Eight major South Korean banks have announced plans to introduce a won-pegged stablecoin by early 2026 at the latest. In addition, BOK Deputy Governor Ryoo Sangdai supports the idea that banks should be the main issuers of stablecoins before the concept spreads to other sectors.

Conclusion

The South Korean central bank is on track to strengthen regulation and research into cryptocurrencies and digital currencies. With the creation of new teams, the planned establishment of a virtual assets committee, and support for stablecoins, the country is preparing for a digital future that will require both innovation and rigorous oversight. This move clearly shows that South Korea sees cryptocurrencies not only as part of the current market, but also as a key element of its financial strategy for the future.

*This is not investment advice.

The Coingarage Team