On January 27, Bank of Korea Governor Rhee Chang-yong stated during the Asian Financial Forum in Hong Kong that, amid changing market conditions and mounting pressure from capital flows, regulators have allowed Korean residents to invest in virtual assets issued overseas. At the same time, financial authorities are studying the establishment of a new registration framework, under which domestic institutions may be permitted to issue virtual asset–related products, provided that compliance requirements are met.
Rhee noted that KRW-denominated stablecoins are expected to be used primarily in cross-border transaction scenarios, while tokenized deposits would be more closely integrated into domestic payment and settlement systems. This functional distinction reflects regulators’ efforts to clearly define the usage boundaries of different types of virtual assets, as well as their heightened focus on risks associated with cross-border capital movements.
When discussing stablecoins, Rhee acknowledged that the sector remains highly controversial. In particular, he warned that if KRW stablecoins are used in combination with widely circulated and easily accessible USD stablecoins in cross-border transactions, they could potentially be employed to circumvent existing capital flow management mechanisms, thereby amplifying underlying financial risks. As a result, this issue has become a key focus for regulators when assessing the compliance and controllability of stablecoins.
In an effort to strike a balance between financial innovation and systemic stability, the Bank of Korea is advancing multiple pilot initiatives in parallel, including trials of tokenized deposits and wholesale central bank digital currencies (CBDCs), with the aim of preserving the existing two-tier financial system structure. These measures are widely viewed as an important foundation for enhancing transaction transparency and risk identification capabilities while introducing new forms of digital assets.
Against the backdrop of increasingly stringent global regulation of virtual assets, issues surrounding cross-border transactions, stablecoin circulation, and related risk management continue to attract close attention from both policymakers and market participants. Risk analysis and transaction monitoring tools such as Trustformer KYT are being applied within this evolving regulatory landscape to support compliance assessments and risk identification for virtual asset activities.