Who Will Mint the Digital Won?

South Korea is in a pickle over who should be allowed to create a digital version of its currency, the won. The country's central bank wants banks to be in charge, but others think this could stifle competition and innovation. The Bank of Korea argues that banks should control the issuance of won-backed stablecoins. They believe this will help maintain financial stability and prevent any sudden outflows of money. However, regulators and lawmakers are worried that this could limit competition and slow down the growth of the digital currency market. The debate is centered around the proposed Digital Asset Basic Act, which aims to define stablecoin issuance and supervision. The Bank of Korea wants a "banks-first" model, where banks would have at least 51% ownership of any stablecoin consortium. They believe this will ensure that stablecoins are issued and managed responsibly. On the other hand, the Financial Services Commission and lawmakers are concerned that this could create a monopoly and limit the growth of the digital currency market. They argue that more companies should be allowed to issue won-backed stablecoins, which would increase competition and innovation. The standoff has delayed the passage of the Digital Asset Basic Act, with the bill now expected to be pushed into 2026. In the meantime, firms like Toss are lining up to issue a won-backed stablecoin once the rules are finalized.The debate over who should issue stablecoins is ultimately a dispute over which institution should have primary responsibility when private money becomes systemically important. The Bank of Korea views stablecoins as a potential extension of the payments system and, therefore, as a monetary policy and financial stability issue. The Financial Services Commission, however, views stablecoins as a regulated financial innovation that can be supervised through licensing, disclosure, reserve standards, and ongoing enforcement. The "51% rule" is a controversial aspect of the debate. It suggests that a won-backed stablecoin issuer should be a consortium led by commercial banks, with banks holding at least a 51% ownership stake. The Bank of Korea argues that this will ensure that stablecoins are issued and managed responsibly, while critics argue that it could reduce competition and slow experimentation. Even if South Korea ultimately allows non-banks to issue won-backed stablecoins, regulators still have plenty of levers to prevent the product from exhibiting shadow-bank-like risk characteristics. The government's draft approach has focused on reserve quality and segregation, steering issuers toward highly liquid, low-risk backing such as bank deposits and government debt. The regulatory standoff is unfolding while the market is already preparing for won-backed stablecoins. Major commercial banks are gearing up for a bank-led model, while large consumer platforms and crypto-native players are exploring how they could issue or distribute a won-pegged token if the rules allow it. The longer Korea debates issuer eligibility, the more everyday stablecoin activity defaults to offshore, dollar-based infrastructure.