South Korea Central Bank Establishes Crypto Monitoring Committee

• Bank of Korea creates Virtual Asset Supervisory Committee to monitor cryptocurrency markets and coordinate government cooperation.

• Central bank’s Digital Currency Research Team rebranded to operational Digital Currency Team.

The central banking authority in South Korea has declared the establishment of a special virtual asset supervisory committee. At the same time, the Bank of Korea reorganized its research units on digital currencies to speed up the practical implementation work. These tactical actions are a sign of the changing attitude of the country toward the regulation of digital assets and the development of digital financial infrastructure.

Strategic Pivot Toward Digital Currency Implementation

The new Virtual Asset Team will manage the monitoring of the cryptocurrency market and organize the work of government cooperation. Authorities have affirmed that the committee will discuss stablecoin regulations and virtual asset policy deliberations in future legislative processes. This is a change in organization as South Korean banks consider won-pegged stablecoin development projects that will be launched later in 2025.

The Digital Currency Research Team at the central bank was given a major rebrand and was renamed the operational Digital Currency Team. Bank officials stressed that this change of nomenclature is indicative of a shift in the direction of theoretical studies to practical experimentation with digital currencies. 

Two more specialized teams were formed, the Digital Currency Technology Team, which was involved in research investigations, and the Digital Currency Infrastructure Team, which was involved in the development of testing platforms.

The cryptocurrency fever in South Korea hit a new political level after the presidential election of Lee Jae Myung last month. His crypto-friendly campaign platform included the promise to authorize stablecoins and approve crypto exchange-traded funds in the domestic markets. Such policy commitments have given a big boost to the digital asset adoption plans of the financial sector.

On June 29, the Bank of Korea had earlier delayed its retail central bank digital currency testing program. This postponement decision was influenced by government support of local stablecoins and participation of the banking sector in costs. The testing program, which was initially announced in November 2023, was to end its most recent phase on June 30.

The officials of the central banks reported that the continuation of the CBDC projects is still probable when the regulatory uncertainties are resolved during the legislative procedures. Governor Lee Chang-yong emphasized the digital currency needs of South Korea in the future, irrespective of the particular forms of implementation.

In June, eight major South Korean banks revealed their plans to develop stablecoins and launch them with won pegs. Deputy Governor Ryoo Sangdai promoted banks as the main issuers of stablecoins and then extended this to other sectors of the economy. This is a middle-ground solution between the old financial institutions and the new demands of the cryptocurrency market, which is led by banks.