On January 27, 2026, South Korea’s central bank signaled a stricter approach to digital assets as market pressures and capital flow risks intensify.
Bank of Korea (BOK) Governor Rhee Chang-yong spoke at the Asian Financial Forum in Hong Kong, addressing overseas crypto access, stablecoins, and future regulatory direction. Reported by RTHK, the remarks provide insight into the country’s evolving digital finance stance.
Rhee emphasized that allowing residents to invest in foreign virtual assets was intended to ease market pressure and meet investor demand, not to relax rules.
Regulators are considering a registration regime to let domestic institutions issue virtual assets under closer supervision. He warned that easing rules may boost short-term activity but could carry hidden economic risks, citing lessons from the 2008 financial crisis.
Stablecoins and Capital Flow Risks
Rhee expressed concern over a potential Korean won-denominated stablecoin, saying such a token could circumvent capital-flow controls. Won-based stablecoins may mainly support cross-border transactions, while tokenized deposits are better suited for domestic payments.
He pointed out that exchange rate volatility can quickly change the behavior of investors. Strong and fast market movements could cause funds to flow into widely available U.S. dollar stablecoins, which are less expensive than transferring dollars. This could lead to huge and sudden capital movements, making it harder to supervise.
A large number of stablecoins are issued by non-bank institutions, making them less visible to and less enforceable by regulatory authorities. The relationship between won-denominated stablecoins and U.S. dollar-denominated stablecoins may increase the risks of capital flow.
Bank Of Korea Tests CBDC Models
South Korea is already operating an efficient real-time payment system, which reduces the benefits that a retail CBDC could provide. The Bank of Korea has conducted pilot projects to test different approaches to the model.
The authorities are concentrating on tokenized deposits and wholesale CBDCs to strengthen the two-tier financial system while allowing innovation.
Rhee said that digital finance is still a complex and controversial area. The regulatory framework must become tighter, not looser, as virtual assets expand in the financial system.
Why This Matters
Won-denominated stablecoins may trigger rapid international money flows, making regulation and exchange rate dynamics in South Korea more complicated.
The tightening of regulations on digital assets increases the focus on South Korean institutions, which guide crypto adoption and investment in the South Korean financial system.
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