TechFlow news, October 28 — According to Decrypt, the Bank of Korea issued a report on Monday warning against won-denominated stablecoins. It emphasized that privately-issued stablecoins lack the institutional trust necessary to maintain monetary stability and suggested that traditional banks should lead stablecoin issuance.
The central bank stated that currency stability relies on trust rather than technology, citing examples of stablecoin depegging risks such as the Terra/Luna collapse and USDC falling to $0.88 during the Silicon Valley Bank crisis. The report particularly highlighted that non-dollar stablecoins face more severe risks due to limited circulation.
Despite these warnings, South Korea continues advancing its financial innovation. In September, digital asset custodian BDACS partnered with Woori Bank to launch KRW1, South Korea's first fully compliant, won-backed stablecoin built on the Avalanche blockchain.
