Nations around the world are found in different stages of evaluation or establishment of centralized banking currencies (CBDC).
In the Crypto For Advisors Bulletin today, we look east, such as Dr. Sangmin Seo, president of the Kaia Dlt Foundation, compares and contrasts the closed and controlled CBDC strategy of South Korea with the open frame of Japan.
Then, Eightcap Patrick Murphy answers questions about how these changes will impact investors in Ask to Expert.
– Sarah Morton
What are the approaches to South Korea and Japan to Stablcoins?
After the approval of the Genius Law in the US, the projects, implementations and regulations of Stablecoin are now an important issue of discussion worldwide. South Korea and Japan are having high level discussions and currently advanced on how these stablecoins should operate. And how the private sector and governments should interact in the regulation of the stable.
Central Banks in Korea and Japan differ in their approaches to Stablecoins and CBDC:
- A CBDC, or a digital currency controlled by the Central Bank, It is a digital currency fed by blockchain controlled by a central bank linked to a denomination of currency of the real world.
- A stablecoin is typically issued by private companies. They are usually designed to have an identical value to real world currencies.
Japan: CBDC can learn from Stablecoins
The Bank of Japan maintains a firm position that CBDC should only be used for interbank settlements. Stablecoins issued by private banks can be used for company to company (B2B) and consumer company (B2C) proceedings. The Bank of Japan and the Financial Services Agency have devised a regulatory framework of Stablecoin with a positive position on the use of private regulated stables.
Although the Bank of Japan recognizes the “potential of the stables as an efficient means of payment”, it also provides for coexistence with CBDC and sees the digital yen as a complementary form, instead of competitive, of cash, with traditional finances.
The governor of the Bank of Japan, Kazuo Ueda, said recently: “The stable increases small international remittances, which leads to risk diversification. With more high frequency micropagos, it will be interesting to explore how CBDC can play a complementary role.” Suggesting that private stablcoins could provide learning for a CBDC design in terms of their payment efficiency.
South Korea: ambivalence but leaning towards private stables
This contrasts with the current ambivalent position of the Bank of Korea on whether private stables must be controlled or not by central banks, taking into account that they will potentially cause instability in the value of the national currency or the capital flight. It is crucial to understand that Korea has very tight capital controls in the currency system.
However, the National Assembly of South Korea has led the pro-stable discussions by proposing three different digital asset bills to legalize KRW Stablecoins. These bills occurred after President Jae Myung Lee promised to create national stable during the recent electoral campaign that successfully completed in June. It is noteworthy that the Korean CBDC project stopped on June 29, 2025, after these Stablecoin discussions.
Image: Kaia
As a result, many web3 competition consortiums, Fintech and the banks are fighting for a position to be part of any future Stablecoin design. Kakao and Naver, the largest IT companies in South Korea, have begun their Stablecoin research work forces, presented registered brands or formed an alliance group that seeks potential partners.
Circle, the USDC issuer, signed a memorandum of understanding with Hana Bank, one of the main banks of Korea, to lay the foundations for a future business alliance of Stablecoin. Private Banks of South Korea have already begun to position themselves as Stablecoin businesses; The CBDC project froze in June.
However, South Korea has maintained a regulation of “a bank for a centralized cryptographic exchange”, blocking new market participants. Therefore, many in the industry expect a lot to see which of the three bills are adopted.
Why the approaches of Japan and South Korea are important for the stablecoins that are not USD
Instead of benefiting the South Korean economy, the Bank of Korea and others argue that a Korean cattle (KRW) Stablecoin supported will not avoid capital flights from South Korea, since these stablecoins will not be widely used in transactions of global digital assets such as USD Stablecoins.
Despite these statements, the private sector could well have an outstanding role in the creation of a stable of South Korea, especially because South Korea has the second largest retail market.
The interaction between the private sector and the governments in the regulation of the stable, as well as the way in which South Korea and Japan address these problems, particularly in the balance of the mass adoption of stables with the fulfillment of the web3 principles, has implications beyond its borders.
– Dr. Sangmin Seo, President, Kaia Dlt Foundation
Ask an expert
Q: What is promoting change in Asia to integrate blockchain technology into traditional financial systems?
TO: Asia’s blockchain hug is a strategic pivot, which goes beyond the speculative aspects of cryptocurrency to its potential as a fundamental technology. Policy leaders throughout the region see that regulatory clarity is essential for sustainable innovation; Examples such as the Hong Kong licenses regime for virtual asset services suppliers (Vasps) and Regulated Defi payment pilots and Singapore transverse payment show this in action. This proactive approach creates regulatory clarity and the robust infrastructure necessary to facilitate safe transactions in the chain and the most efficient cross -border payments, ultimately modernizing financial systems.
Q: The new regulatory framework of South Korea is a significant development. What are the key characteristics and what do they point out for institutional adoption?
TO: The new South Korean framework, formalized in the basic law of digital assets (Gave)It represents an important step towards institutional acceptance. Its key characteristics, including comprehensive guidelines for Stablecoins and the introduction of criticized funds in cryptocurrency exchange (ETF)They are designed to create a safer and more defined environment for digital assets. In addition, the launch of a blockchain network backed by the State underlines a strategic approach in the construction of an institutional degree infrastructure. These developments collectively indicate that South Korea sees digital assets not only as a retail product, but as a legitimate part of the financial ecosystem, racing the way for greater institutional participation.
Q: What are the key conclusions for the financial advisors of the Blockchain panorama in evolution of Asia, and what should be monitoring?
TO: The developments in Asia, particularly in countries such as South Korea, provide a clear road map for the future of global finances. Advisors must recognize that this trend indicates a movement towards institutional acceptance and the potential of new regulated financial products. It is crucial to monitor developments in tokenized values, which could fundamentally change how the assets are issued and resolved fundamentally. In addition, monitoring the new regulations of Stablecoin and the digital knows its client (KYC) Frameworks is essential, since these trends could be a preview of the next evolution of capital markets worldwide.
– Patrick Murphy, commercial director, Eight
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