Nations around the world are in different stages of evaluation or establishing centralized bank’s digital currencies (Cbdcs).
In today’s crypto for advisers Newsletter we look to the east as Dr. Sangmin SEO, chairman, Kaia DLT Foundation, compares and contrasts South Korea’s closed and controlled CBDC strategy with Japan’s open framework.
Then Patrick Murphy from Eightcap answers questions about how these changes will affect investors in asking an expert.
– Sarah Morton
What are South Korea’s and Japan’s approaches to stableecoins
Following the passage of the brilliant action in the United States, stableCOin projects, implementations and regulations are now an important topic of discussion throughout the world. South Korea and Japan both have high -level and advanced discussions at the moment about how these stablecoins should work. And how the private sector and governments should interact in the regulation of stableecoins.
Central banks in Korea and Japan differ in their approaches to stableecoins and CBDCs:
- A cbdc, or a central bank controlled digital currency, is a blockchain-driven digital currency controlled by a central bank attached to a real currency-church community.
- A stableecoin is Typically issued by private companies. They are usually designed to have a value identical to currencies in the real world.
Japan: CBDCs can learn from stableecoins
Bank of Japan maintains a firm attitude that CBDCs should only be used for interbank settlements. Private Banks’ issued stableecoins can be used for business for business (B2B) and business-to-consumer (B2C) Transactions. The Bank of Japan and Financial Services Agency have devised a stableecoin regulatory framework with a positive attitude towards the use of privately regulated stableecoins.
While the Bank of Japan recognizes “the potential for stableecoins as an effective means of payment”, it also sees coexistence with CBDCs and considers the digital yen a complementary, rather than competitive form of cash with traditional economy.
The Governor of Bank of Japan, Kazuo Ueda, recently said, “Stableecoins are increasing small international transfers, leading to risk diversification. With more high -frequency micropayments, it will be interesting to investigate how CBDCs can play a complementary role.” Suggests that private stablecoins could provide experience with a CBDC design with regard to its payment efficiency.
South Korea: Ambivalence but leans against private stableecoins
This contrasts with the Bank of Korea’s current ambivalent attitude as to whether private stableecoins should be controlled by central banks, given that they will potentially cause instability in domestic currency value or capital flight. It is important to understand that Korea has very tight capital controls on the currency system.
However, South Korea’s National Assembly has led the Pro-StableCOin discussions by proposing three different digital asset bills to legalize KrW-StableCoins. These bills came after President Jae Myung Lee promised to create domestic stablecoins during the recent election campaign that ended successfully in June. It is noteworthy that Korea’s CBDC project was stopped on June 29, 2025, after these stableCOin discussions.
Image: Kaia
As a result, many competing consortia from Web3, Fintech and Banks are all together to be part of any future stablecoin design. Cocoa and Naver, the largest IT companies in South Korea, have begun their stablecoin research tasks, handed in trademarks or formed an alliance group seeking potential partners.
Circle, USDC emergence, signed a Mou with Hana Bank, one of Korea’s largest banks, to lay the basis for a future stablecoin Business Alliance. Private South Korean banks have already begun to place themselves as stableecoin companies; The CBDC project was frozen in June.
Nevertheless, South Korea has maintained a “One Bank for One Centralized Crypto Exchange” regulation that blocks new market participants. Therefore, many in the industry are very much waiting to see which of the three bills has been adopted.
Why Japan and South Korea’s approaches are important for non-USD stableecoins
Instead of taking advantage of the South Korean economy, Bank of Korea and others claim a Korean-Won (Krw) Stacked stablecoin does not prevent capital flights from South Korea as these stableecoins will not be used extensively in global digital asset transactions such as USD stableecoins.
Despite these statements, the private sector could well have a prominent role in the creation of a South Korean stablecoin, especially since South Korea has the second largest retailcrypto market.
The interaction between the private sector and governments in the regulation of stablecoins as well as how South Korea and Japan address these issues, especially by balancing mass absorption of stablecoins with the compliance with web3 principles, have consequences beyond their limits.
– Dr. Sangmin SEO, President, Kaia DLT Foundation
Ask an expert
Question: What drives the change in Asia to integrate blockchain technology into traditional financial systems?
ONE: Asia’s embrace of blockchain is a strategic turn that moves beyond the speculative aspects of cryptocurrency to its potential as a basic technology. Political leaders throughout the region see that legislative clarity is important for sustainable innovation; Examples such as Hong Kong’s License Regime for Virtual Activities Service Providers (Vasps) And Singapore’s regulated defi and cross -border payment pilots show this in action. This proactive approach creates the legislative clarity and robust infrastructure needed to facilitate secure on-chain transactions and more efficient cross-border payments that ultimately modernize financial systems.
Question: South Korea’s new regulatory framework is a significant development. What are the most important features and what do they signalize for institutional adoption?
ONE: South Korea’s new frame, formalized in Digital Asset Basic Act (DABA)represents a big step toward institutional acceptance. Its key features, including extensive guidelines for stableecoins and the introduction of crypto exchange traded funds (ETFS)is designed to create a safer and defined environment for digital assets. In addition, the launch of a state-sponsored blockchain network emphasizes a strategic focus on building infrastructure in institutional quality. These developments collectively signal that South Korea considers digital assets not only as a retail product, but as a legitimate part of the economic ecosystem and paves the way for greater institutional participation.
Question: What are the most important takeaways for financial advisers from Asia’s evolving blockchain landscape, and what should they monitor?
ONE: Developments in Asia, especially in countries such as South Korea, provide a clear roadmap for the future of global funding. Advisers must recognize that this trend signalizes a step towards institutional acceptance and the potential for new, regulated financial products. It is important to monitor the development of tokenized securities, which can basically change how assets are issued, traded and wound up. In addition, by keeping an eye on new stableecoin rules and digital know your customer (Kyc) Frames are important as these trends could very well be a preview of the next development of capital markets globally.
– Patrick Murphy, Chief Commercial Officer, Eighcap
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