TLDR
- South Korean financial experts and opposition politicians urge integrating Bitcoin into national reserves and creating a won-backed stablecoin
- The push comes as President Trump signed an executive order establishing a US Bitcoin Reserve and hosted a White House Crypto Summit
- South Korea’s Democratic Party plans to reshape crypto policy if it returns to power after potential May elections
- Industry leaders warn that without a won-based stablecoin, South Korea risks losing “monetary sovereignty” to USD-pegged stablecoins
- Current regulations prevent non-residents from trading on South Korean exchanges, pushing local traders to offshore platforms
South Korean financial experts and opposition politicians are urging the country to add Bitcoin to its national reserves and develop a won-backed stablecoin. The proposal comes as a response to recent cryptocurrency initiatives by US President Donald Trump.
At a forum held at the National Assembly on Thursday, experts and members of the Democratic Party discussed how South Korea should respond to global shifts in cryptocurrency finance. The meeting took place just before President Trump signed an executive order establishing a Bitcoin Reserve.
Kim Jong-seung, CEO of blockchain firm xCrypton, emphasized the need for South Korea to develop a clear policy response. ”
If the US moves toward holding bitcoin as part of its reserves, South Korea will need to respond with a clear policy,” Kim said at the event.
The White House hosted its first crypto summit on Friday, where Trump outlined his administration’s priorities to “catalyze the crypto Renaissance.” The summit included industry leaders such as MicroStrategy Chairman Michael Saylor and Coinbase CEO Brian Armstrong.
South Korea’s foreign exchange reserves currently consist of traditional assets like US dollars, gold, and government bonds. Experts at the forum suggested looking beyond just stockpiling Bitcoin and exploring the creation of a won-backed stablecoin.
Unlike Bitcoin, stablecoins maintain a fixed value by being pegged to traditional currencies or assets. Without a domestic stablecoin alternative, Kim warned that South Korea could lose “monetary sovereignty” if US dollar-pegged stablecoins dominate the digital economy.
“We need to develop a model linking dollar stablecoins and won stablecoins for trade transactions,” Kim stated. This would help South Korea maintain control over domestic and international financial transactions.
Economics professor Seo Eun-sook from Sangmyung University highlighted the urgency of aligning South Korea’s financial policies with global trends. She noted that “major economies like the US and the European Union are already working toward stablecoin-based international payment systems.”
Business management professor Kang Hyoung-goo of Hanyang University proposed a stablecoin backed by South Korean government bonds. He argued that such an initiative could enhance financial stability and credibility.
According to Kang, one of the main obstacles preventing South Korea from joining the MSCI Developed Markets Index is the absence of an offshore won market. A government-backed stablecoin could help address this issue by making won-denominated assets more accessible internationally.
“A government bond-backed stablecoin could also help distribute South Korea’s long-term government bonds worldwide,” Kang said. This could attract more foreign investment to the country.
The forum also addressed regulatory barriers in South Korea’s crypto sector. Current regulations prevent non-residents from trading on South Korean cryptocurrency exchanges, pushing domestic traders to offshore platforms like Binance.
Cho Jung-hee, managing attorney at D.Code Law Group, expressed concern about this outflow of domestic capital. “In May 2023, about 13 percent of Binance’s total trading volume came from South Korean traders,” Cho noted.
Rep. Kim Min-seok, who leads the Democratic Party’s policy preparation committee, indicated his party would reshape South Korea’s crypto regulations if it returns to power. The country could hold an election in May if President Yoon Suk Yeol’s impeachment is confirmed by the Constitutional Court.
The discussions in South Korea coincide with growing calls to implement digital asset stockpiles and reserves in other Asian countries. Hong Kong has committed to advancing its digital assets sector, while Japan has an ongoing proposal for a National Bitcoin Reserve and efforts to reduce crypto taxes.
Min Jung, an analyst at Singapore-based Presto Research, told Decrypt: “I think Korea, in general, is slower than most, as we’ve just approved corporate accounts for crypto, and BTC and ETH ETFs are still not allowed to be traded. It seems like Korea is simply trying to catch up.”
