- Bank of Korea plans to issue deposit tokens using public blockchain networks.
- Rising use of USD-backed stablecoins has triggered sovereignty concerns in Korea.
In a strategic decision toward modernizing its monetary system, the Bank of Korea (BOK) announced it is exploring the use of public blockchains to power its upcoming deposit tokens. The move, revealed by Deputy Governor Lee Jong-ryeol at the Blockchain Leaders Club in Seoul, signals a rare alignment between central banking and decentralized infrastructure.
“We’re looking at ways to connect deposit tokens to public blockchain systems,” Lee said, describing the tokens as a form of stablecoin backed by central bank money.
While most central banks still operate within closed or permissioned networks, South Korea’s openness to public platforms—potentially including Ethereum—shows its seriousness about building a digital currency framework that’s flexible, transparent, and future-proof.
Stablecoin Invasion Spurs Push for Local Alternatives
Foreign stablecoins are flooding South Korea’s crypto market, and officials are starting to worry. In just the first quarter of 2025, tokens like USDT and USDC made up nearly 47.3% of crypto-related capital outflows—totaling 26.87 trillion won (around $19.1 billion), according to recent data.
Lee warned that over-reliance on U.S. dollar-pegged assets could undermine Korea’s financial autonomy. “This could cause issues ranging from monetary instability to increased risks of illicit finance,” he said.
Lawmakers are echoing those concerns. Min Byoung-dug, who chairs the Democratic Party’s Digital Asset Committee, called for a fast-track launch of a Korean won-based stablecoin. “We need to lead the charge before dollar-backed stablecoins become the standard,” he said.
This urgency follows an earlier proposal from opposition leader Lee Jae-myung to issue a national stablecoin as a way to curb the annual 56.8 trillion won (about $40.8 billion) in outbound crypto flows.
Public Chains: High Rewards, Tough Questions
If the BOK moves ahead with integrating public blockchains, it’ll be among the first major central banks to take such a leap. Open networks bring obvious benefits—transparency, global access, and open developer ecosystems. But they also introduce real challenges.
The stablecoin could make the system more resilient and invite broader innovation, referencing the booming $246 billion stablecoin market as of May 2025.
Still, key hurdles remain. Public chains must scale to handle national-level transactions, protect user privacy, and offer governance structures that align with national law. The BOK is considering several hybrid models to meet these demands, including:
- Allowing redemptions between private stablecoins and BOK tokens.
- Requiring private issuers to hold reserves in BOK digital assets.
- Imposing licensing rules to vet participants.
This approach could strike a balance between government oversight and the fast-paced world of decentralized finance (DeFi).
What’s Ahead: Testing, Partnerships, and Legal Frameworks
The BOK’s ongoing pilot program—codenamed Agora Project—is now entering a more hands-on phase. Plans include technical trials, coordination with local exchanges like Bithumb, Coinone, and Korbit, and consultations with the wider crypto industry.
The country’s roadmap for digital currency development now centers on three priorities:
- Issuing deposit tokens that work across various blockchain systems.
- Launching a won-backed stablecoin to protect domestic liquidity.
- Creating clear rules and standards for both public and private token issuers.
If these pieces come together, South Korea could become a model for how to integrate state-backed digital currencies into the wider crypto economy—without giving up control.
South Korea is charting a course that blends the reliability of central bank money with the agility of public blockchain technology. By embracing open networks while also defending its currency, the BOK is trying to write a new playbook for digital finance.
As dollar-based stablecoins continue to dominate global flows, Korea’s push for digital currency independence may set the tone for other nations. Whether this strategy works or not, one thing is clear: the race to redefine money is well underway—and South Korea isn’t sitting on the sidelines.
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