South Korea Considers Bitcoin for National Reserve and Stablecoin Development

Summary

• South Korean experts urge the adoption of Bitcoin for national reserves and the development of a Won stablecoin as a strategic response to US crypto policies and evolving global trends in digital finance.

• The proposal aims to maintain South Korea’s monetary sovereignty in the face of rising dollar-pegged stablecoins and seeks financial innovation through a government bond-backed Won stablecoin for stability and international accessibility.

• Current regulations are criticized for driving crypto trading offshore; the opposition party suggests reforms are needed as South Korea seeks to catch up with other Asian nations advancing in the digital asset space.

Financial authorities and influential figures from South Korea’s opposition party are actively exploring a bold move: integrating Bitcoin into the nation’s official reserves and pioneering the development of a stablecoin anchored to the Korean won.

This proposition, highlighted in a recent seminar, arises as a strategic maneuver to proactively address evolving trends, particularly in light of the United States’ increasingly Bitcoin-centric approach to national reserves.

Kim Jong-seung, the Chief Executive Officer of blockchain innovator xCrypton, underscored the urgency for South Korea to formulate decisive policy responses, especially with the backdrop of anticipated executive actions from U.S. President Donald Trump.

Proponents from South Korea’s financial and political spheres are publicly recommending the nation diversify its reserves by including Bitcoin and establish a domestic stablecoin backed by the won.

This recommendation is directly motivated by the recent pro-cryptocurrency stances originating from the administration of U.S. President Donald Trump.

At a significant forum convened at the National Assembly on Thursday, leading experts and prominent members of the Democratic Party engaged in discussions concerning South Korea’s strategic reaction to global paradigm shifts in cryptocurrency finance.

South Korea’s Crypto Policy Shift

This timely meeting occurred just ahead of President Trump’s widely anticipated executive order focused on establishing a national Bitcoin Reserve within the US.

Currently, South Korea’s foreign exchange reserves predominantly comprise traditional assets, including US dollars, gold bullion, and sovereign bonds.

However, experts participating in the recent forum suggested broadening the scope beyond mere Bitcoin accumulation, advocating for an exploration into creating a stablecoin functionally linked to the won.

In contrast to the volatile nature of Bitcoin, stablecoins are engineered to maintain a steady value, typically by directly linking or “pegging” their value to established fiat currencies or stable assets.

Kim Jong-seung cautioned that without a viable domestic stablecoin alternative, South Korea risks losing critical aspects of “monetary sovereignty” if stablecoins pegged to the US dollar become dominant within the burgeoning digital economy.

To mitigate this, Kim proposed, “We must devise a model that effectively bridges dollar-denominated stablecoins with won-denominated stablecoins for seamless trade transactions.”

This strategic approach, he argued, is crucial for South Korea to preserve robust control over both its domestic and international financial activities.

Economics professor Seo Eun-sook from Sangmyung University stressed the immediate imperative for South Korea’s financial strategies to align with prevailing global trends.

She highlighted that “major global economic powers, such as the US and the European Union, are actively developing stablecoin-based systems for international payments,” indicating a clear direction in global finance.

Rep. Kim Min-seok, leading the Democratic Party’s policy formulation committee, indicated that his party intends to significantly reshape South Korea’s cryptocurrency regulations should they regain political control.

A potentially pivotal election could be triggered as early as May, dependent on the Constitutional Court’s decision regarding President Yoon Suk Yeol’s impeachment proceedings.

Min Jung, an analyst at Presto Research, based in Singapore, commented on the situation, stating to Decrypt: “My perspective is that Korea generally operates at a slower pace compared to many others.

We have just recently authorized corporate accounts for cryptocurrency, and trading of BTC and ETH ETFs remains prohibited.

It appears Korea is essentially engaged in a process of actively trying to catch up with these rapidly evolving global trends.”

Also Read: Upbit Exchange Faces South Korean Regulatory Clampdown 

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