South Korea encouraged to embrace bitcoin reserve and stablecoin backed by the won in response to Trump’s support for cryptocurrency.

Financial experts and industry leaders convened at the National Assembly in Seoul on Thursday to discuss policy responses to the changing landscape of cryptocurrency finance on a global scale. The conversation centered around potential strategies that South Korea could adopt in response to recent announcements, specifically, the need to consider integrating bitcoin into the country’s national reserves and issuing a won-backed stablecoin.

Kim Jong-seung, CEO of blockchain firm xCrypton, highlighted the importance of developing a strategic response in light of the US government’s plans to create a “national strategic reserve of cryptocurrencies,” a move expected to be unveiled at the upcoming White House Crypto Summit. He emphasized that if the US took steps to hold bitcoin as part of its reserves, South Korea would be in need of a clear and comprehensive policy in response.

The discussion at the National Assembly came at a time when global momentum was building towards embracing cryptocurrencies, driven by initiatives like the one in the US. Switzerland and Japan have already made significant strides in this direction, with Switzerland’s “Crypto Valley” in Zug becoming a central hub for blockchain startups and Japan legalizing yen-backed stablecoins. Against this backdrop, Rep. Kim Min-seok, who leads the Democratic Party’s policy preparation committee, hinted at a potential reshaping of South Korea’s cryptocurrency policy should his party come to power.

The experts at the forum pointed out that South Korea’s foreign exchange reserves, typically comprising assets like US dollars, gold, and government bonds, might benefit from looking beyond traditional assets and delving into the possibility of launching a won-backed stablecoin. Kim, the CEO of xCrypton, cautioned against the risks of overlooking the development of a won-backed stablecoin, warning of potential threats to the country’s monetary sovereignty if it remained overly reliant on US dollar-pegged stablecoins in the digital economy.

Establishing a won-backed stablecoin could provide a stable medium for financial transactions and bolster South Korea’s financial influence in global markets. Without such an initiative, the country might face challenges related to its control over domestic and international financial transactions. Seo Eun-sook, an economics professor at Sangmyung University, emphasized the importance of aligning South Korea’s financial policies with global trends, particularly in light of major economies like the US and the European Union moving towards stablecoin-based international payment systems.

Furthermore, regulatory obstacles in South Korea’s cryptocurrency sector remain a significant concern, with current restrictions limiting non-resident access to domestic cryptocurrency exchanges. The discussion also touched upon ways to address this issue and promote the adoption of government-backed stablecoins, such as those tied to South Korean government bonds. Such initiatives could pave the way for enhanced financial stability, credibility, and accessibility to won-denominated assets in international markets.

The forum concluded that South Korea should consider innovative approaches to align its financial policies with global trends and remain competitive in the evolving landscape of cryptocurrency finance. The potential adoption of bitcoin reserves and the issuance of a won-backed stablecoin could serve as strategic responses to ensure the country’s financial resilience and influence in the digital economy.