When it comes to cryptocurrencies or blockchain reform, it seems every country enters through the same door and exits into a different room. Today, the new governor of the Bank of Korea announced that it will continue full-throttle with CBDC, phasing out stablecoins; meanwhile, the UK Treasury unveiled a comprehensive reform package that combines stablecoins and tokenized deposits under a single regulatory umbrella.
New governor in Seoul, former position
Shin Hyun-song, the new governor of the Bank of Korea, announced at his swearing-in ceremony at headquarters in Seoul on Tuesday that they will expand the use of digital central bank currency and deposit tokens in the second phase of Project Hangang. In his speech, he also signaled cooperation with international initiatives such as Project Agora to strengthen the position of the Korean won in global payment systems. Given Shin's past, this stance is not surprising. While heading the Monetary and Economics Department of the BIS (Bank for International Settlements), he published reports arguing that stablecoins could not function as currencies, claiming that the fragmentation problem between different stablecoins structurally prevented this. It was noteworthy that he didn't even mention the word "stablecoin" once in his speech at the ceremony.
However, the stablecoin debate in South Korea is not quietly ongoing. With the support of President Lee Jae-myung, the legislature is trying to create a legal framework for won-based stablecoins under the Digital Asset Basic Law. Large local financial institutions have also begun building infrastructure for stablecoin and digital asset payments in anticipation of this law's passage. However, the discussions slowed down in the shadow of the June 3rd local elections; the law will most likely be brought back to the forefront after the elections. On the other hand, it is known that Shin has softened his stance somewhat over time; he is reported to have accepted that won-based stablecoins can coexist with CBDC. But the priority order officially set at the ceremony is clear: CBDC first, deposit tokens first. The stablecoin issue seems to have been left to Parliament for now.
A different agenda in London
At the same time, the UK Treasury opened a completely different chapter with the package it announced at Fintech Week in London. The package envisages the regulation of traditional payment services, stablecoins, and tokenized deposits within a single legal framework. In other words, the UK is directly including two elements that the South Korean central bank made invisible in its speech into the regulatory equation.
According to the package announced by City Minister Lucy Rigby, stablecoins will be regulated within the scope of payment services by being included in the issuance regime. While the Financial Conduct Authority's (FCA) jurisdiction in the Open Banking area is being expanded, a regulatory framework will also be created for payment transactions carried out by artificial intelligence agents. In addition, new legislation is being prepared to reduce the administrative burden on companies that want to offer stablecoin payment services.
With the package, EY partner and former deputy head of the FCA, Chris Woolard, was appointed as the "Champion of Wholesale Digital Markets" to lead the development of tokenized wholesale financial systems. The Centre for Finance, Innovation and Technology has received an additional £1 million in funding, effective from April. Rigby described the reform as part of an effort to strengthen the UK’s position in financial services and payments innovation.
