Korean Union Warns of ‘Coin Run’ Risks in Stablecoin Debate

• Warning from Bank of Korea's (BOK) labor union about systemic risks of stablecoins, including IT vulnerabilities.
• Emerging concerns amid South Korean debate on stricter stablecoin regulation.

On July 28, 2025, the BOK’s labor union warned that won-backed stablecoins pose systemic financial risks. The union described them as a "modern variant of unauthorized deposit-taking businesses." It also flagged several threats, including IT vulnerabilities, market risks tied to reserve assets, and economic instability. The union warned that eroding confidence in issuers could cause "coin runs" and forced sell-offs of government bonds.

CoinDesk first reported the statement, which coincides with the South Korean National Assembly’s (NA) deliberations on a regulatory framework for stablecoins. The proposed legislation includes mandates for full backing by high-liquidity assets and a minimum capital requirement of 5 billion won for issuers. However, legislators remain divided on whether to allow issuers to pay interest on holdings.

BOK Governor Rhee Chang-yong echoed these concerns. He warned that allowing non-bank entities to issue stablecoins could weaken the central bank’s ability to manage monetary policy. He also cautioned that unregulated issuance might spur capital flight to foreign-currency-backed stablecoins. At the same time, proponents of stablecoin regulation argue that a domestic won-backed stablecoin is essential. They believe it would help South Korea maintain its financial sovereignty and reduce dependence on dollar-backed alternatives.

These legislative moves are part of broader efforts to enhance oversight in the digital currency space. They aim to balance financial security, consumer protection, and economic stability. The ongoing debate underscores the complex interplay between financial innovation and regulatory safeguards.

As of July 28, 2025, 10:22 UTC, Tether USDt (USDT) is trading at $1 with a -0.018% 24-hour volume change, while USDC (USDC) is also priced at $1, with a -0.003% change, according to CoinMarketCap.