The Bank of Korea warns of the risks of stablecoin decoupling and calls for banks to take the lead in issuance

ChainCatcher news, the Bank of Korea released a report on Monday warning about won-denominated stablecoins, emphasizing that private issuers lack the institutional trust necessary to maintain currency stability, and suggesting that stablecoin issuance should be led by traditional banks.

The central bank pointed out that currency stability relies on trust rather than technology, citing examples of stablecoin de-pegging risks, such as the Terra/Luna collapse and USDC dropping to $0.88 during the Silicon Valley Bank crisis. The report particularly emphasized that non-U.S. dollar stablecoins face more severe risks due to limited circulation. Despite the warnings, financial innovation in South Korea continues to advance. In September, digital asset custody firm BDACS partnered with Woori Bank to launch Korea's first fully compliant won-backed stablecoin, KRW1, which is built on the Avalanche blockchain.