South Korea’s political landscape is buzzing with a bold new proposal: a stablecoin pegged to the Korean won. Lee Jae-myung, leader of the Democratic Party and a major contender in the upcoming presidential elections, has thrown his weight behind this initiative. The goal? To stem capital outflows and bolster the nation’s financial sovereignty. Speaking at a policy discussion, Lee advocated for a stablecoin that would keep wealth within the country’s borders while reducing dependence on USD-backed digital assets.
A Push for Domestic Stability
In the first quarter of 2025, South Korean crypto exchanges witnessed asset outflows totaling a staggering 56.8 trillion won ($40.8 billion), with nearly half attributed to foreign stablecoins. This staggering figure underscores the urgency of Lee’s proposal. “We need to establish a won-backed stablecoin market to prevent national wealth from leaking overseas,” Lee emphasized. His comments, reported by The Korea Herald, highlight the strategic importance of a domestic digital currency solution. This mirrors global trends, as seen in Tether’s U.S.-Focused Stablecoin Could Launch Later This Year, which aims to address similar concerns in the U.S. market.
Lee’s proposal comes at a time when South Korean law currently bars domestic stablecoin issuance, forcing exchanges to lean on alternatives like USDt (USDT) and USDC (USDC). The policy shift aims to rectify this imbalance, ensuring economic resilience amid a rapidly evolving global crypto landscape.
Navigating a Complex Regulatory Terrain
It’s not just about creating a stablecoin. Lee’s vision is part of a comprehensive digital asset strategy, which also includes the legalization of spot cryptocurrency ETFs. This ambitious agenda aligns with similar promises from his political rival, Kim Moon-soo of the People Power Party, who is also advocating for spot crypto ETFs.
However, the path to implementation isn’t without its hurdles. Economists have voiced concerns over potential ramifications. Shin Bo-sung, a senior researcher at the Korea Capital Market Institute, cautioned against the risks of stablecoins inflating the money supply and shifting monetary control to private entities. “Stablecoins are essentially another form of banking, creating money out of nothing,” Shin noted, sparking a debate over the economic principles at play. For a deeper dive into the regulatory implications, see U.S. Senate Moves Toward Action on Stablecoin Bill.
Building the Infrastructure for a Digital Future
To support these initiatives, Lee’s campaign is also pushing for an integrated monitoring system, reduced transaction fees, and a framework to allow institutional investment in cryptocurrencies. The National Pension Fund and other institutional players could enter the crypto market, contingent upon meeting price stability criteria.
In a parallel move, the Democratic Party has established a “Digital Asset Committee,” inaugurated on May 13 at the National Assembly Members’ Hall in Seoul. This committee aims to resolve regulatory uncertainties and address stablecoin regulations, joining other bodies like the Virtual Asset Committee and the Financial Services Commission’s crypto task force.
The Democratic Party is also poised to introduce the Digital Asset Basic Act, a significant step toward creating a robust legal framework for cryptocurrencies and stablecoins. The proposed legislation would mandate issuers to maintain reserves of at least 50 billion won and seek approval from the Financial Services Commission.
Looking Ahead: Challenges and Opportunities
As South Korea grapples with these transformative proposals, the crypto community watches with bated breath. The introduction of a won-based stablecoin could redefine the nation’s financial landscape, yet it raises complex questions about monetary policy and regulatory oversight. Will South Korea’s bold experiment in digital currency sovereignty set a precedent for other nations? Or will it encounter insurmountable obstacles in its execution?
The answers remain to be seen, but one thing is clear: South Korea is at the forefront of a financial revolution, navigating uncharted waters in the digital age. The outcomes of these ambitious initiatives will undoubtedly have ripple effects across the global cryptocurrency market, shaping the future of digital finance.
Source
This article is based on: South Korean presidential front-runner proposes won-based stablecoin
Further Reading
Deepen your understanding with these related articles:
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- Visa and Baanx Launch USDC Stablecoin Payment Cards
- Ripple Offered $4B-$5B for Stablecoin Issuer Circle: Bloomberg
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
