South Korea’s Democratic Party leader, Lee Jae-myung, has proposed the creation of a won-backed stablecoin aimed at preventing capital outflows and strengthening national financial sovereignty. This digital asset would allow South Korea to retain wealth domestically by reducing reliance on foreign-issued stablecoins such as USDT and USDC. Currently, domestic stablecoin issuance is prohibited under South Korean law, compelling exchanges to utilize dollar-based alternatives. During the first quarter of 2025, nearly half of the 56.8 trillion won ($40.8 billion) in outbound crypto assets were linked to foreign stablecoins.
Lee emphasized the need to establish a local stablecoin market to prevent national wealth from leaking overseas. His broader digital asset strategy also involves legalizing spot cryptocurrency ETFs and enabling institutional investors like the National Pension Fund to invest in cryptocurrencies once certain price stability criteria are met. Proposed measures include an integrated monitoring system and lower transaction fees under government oversight to promote crypto accessibility.
Economists, however, have voiced concerns about the risks stablecoins pose, including potential increases in the money supply and shifts of monetary control to private issuers. Shin Bo-sung of the Korea Capital Market Institute cautioned that stablecoins might create money "out of nothing," akin to banking.
Separately, South Korea’s Bank of Korea has flagged the dangers stablecoins pose to monetary policy and financial stability, noting that nearly half of outbound crypto transfers were dollar-based stablecoins. This trend has triggered calls for regulatory interventions similar to global practices involving central bank oversight to mitigate risks demonstrated by events like the Terra collapse.
To coordinate policy and promote industry growth, the Democratic Party launched a Digital Asset Committee in May 2025 focused on resolving regulatory uncertainties and creating a legal framework. The party plans to introduce the Digital Asset Basic Act, which would require stablecoin issuers to maintain at least 50 billion won in reserves and obtain approval from financial regulators.