Democratic Party’s hasty push for crypto politics must not outpace policy prudence
Crypto is crashing the campaign trail. With South Korea’s presidential election on June 3 fast approaching, one of the more unlikely issues to seize the spotlight is stablecoins — digital tokens tied to real-world currencies.
At the forefront is the main opposition Democratic Party of Korea, which has positioned won-backed stablecoins as a flagship of its digital finance agenda. Advocates argue they will preserve monetary sovereignty and foster innovation. Yet the speed with which this intricate issue has been politicized raises critical concerns — not only about financial technology, but about the maturity of political leadership.
The national spotlight on stablecoins sharpened following the first televised presidential debate on May 18. The Democratic Party’s nominee, Lee Jae-myung, declared that Korea must “build a won-based stablecoin market” to avert digital exclusion and protect national assets.
Party lawmakers quickly echoed that urgency. Rep. Min Byoung-dug warned that South Korea risks being sidelined by the rise of dollar-backed tokens and called for the development of a domestic alternative to ensure global competitiveness. Rep. Kwon Chil-seung added that such a system could buffer small enterprises against exchange-rate volatility, long a barrier to cross-border capital movement.
The argument is, at least in part, compelling. As the United States advances the Genius Act — a legislative effort to formalize dollar-denominated stablecoins — South Korean policymakers are understandably wary of losing ground in a race that could define the future of sovereign finance.
For the Democratic Party, stablecoins serve as a digital hedge against the encroaching influence of the dollar in an increasingly dematerialized financial system. From this perspective, inaction looks less like prudence and more like surrender.
But enthusiasm has met resistance. Lee Jun-seok, the candidate of the minor conservative New Reform Party, has raised pointed questions about the Democratic Party’s readiness. He cited the 2022 collapse of the Terra-Luna project, whose won-pegged stablecoin, KRT, lacked the collateral backing required for price stability. Its dramatic failure erased billions in investor value and left regulators scrambling. “There’s no explanation for collateral, market risks or safeguards against past failures,” Lee cautioned, accusing the Democrats of cloaking risky ideas in techno-utopian language.
Indeed, the Democratic Party appears to be charting a path toward stablecoin adoption without a road map for regulation. When pressed in the debate, Lee Jae-myung vaguely assured that a one-to-one reserve ratio would preserve stability — but offered little clarity on how those reserves would be verified, how illicit transactions would be deterred, or which institutions would be accountable.
Meanwhile, the Bank of Korea has taken a firm stance: If won-based stablecoins are to enter circulation, the central bank must have direct authority over their approval and oversight. Anything less, it warns, risks eroding the effectiveness of monetary policy, destabilizing the broader financial system and encouraging regulatory arbitrage. The shadow of Terra-Luna still hangs heavy, and the consequences of repeating that mistake could be far-reaching.
None of this is to dismiss the utility of tokenized assets. In theory, stablecoins could lower transaction costs, streamline payments and widen access to financial services. But elections are a poor moment to experiment with systems that even central banks approach warily. Political campaigns reward bold ideas, not careful vetting. What South Korea needs now is the latter.
The country has already paid once for its crypto exuberance. There is no shame in caution, only in forgetting. Stablecoins may yet have a role to play in South Korea’s financial architecture. But that role must be earned, not assumed — and certainly not imposed on the fly, mid-campaign, without a safety net.
The danger is not that Korea is too late to the party. It is that it arrives too soon, and with too little preparation.
koreadherald@heradcorp.com
