South Korea’s Financial Holding Companies and Stablecoins
In South Korea, major financial holding companies are actively establishing partnerships with leading technology corporations as they prepare to enter the burgeoning stablecoin market. A recent analysis published by The Korea Times highlights that four significant financial entities—KB Financial Group, Shinhan Financial Group, Hana Financial Group, and Woori Financial Group—are collaborating with tech giants like Naver, Kakao, and Samsung Electronics. These alliances aim to harness and enhance the technological framework necessary for developing stablecoins and facilitating transactions in this emerging market, which has witnessed a surge in attention globally.
Current Market Dynamics
Despite not having formal recognition as a payment method by the South Korean authorities, the trading volume for domestic stablecoins has soared beyond $41.15 billion amid increased sector engagement. A knowledgeable source within the industry emphasized that joining forces with tech firms is crucial for banks to acquire the requisite technology for stablecoin issuance, remarking that financial institutions would require ample time to construct their own infrastructures. In contrast, tech giants possess well-established platform ecosystems, which will enable them to create practical applications once stablecoins are launched.
Banking Initiatives and Collaborations
At this stage, banks are at the forefront of discussions about issuing stablecoins pegged to the Korean won, with the potential for either a consortium of banks or individual entities to assume the role of primary issuers still hanging in the balance. Meanwhile, fintech companies are being viewed primarily as technical partners in these endeavors.
Current partnerships between KB, Shinhan, and Hana with Naver focus on multiple product launches and initiatives, while these banks are also seeking collaborative opportunities with Dunamu, the firm behind Korea’s largest cryptocurrency trading platform, Upbit. Woori Financial Group, in particular, is extending its existing collaboration with Samsung Electronics, particularly through Samsung Wallet, which positions the tech giant uniquely to facilitate the issuance and management of digital currencies, unlike Naver and Kakao that will approach this market through financial alliances.
Additionally, Woori owns a 5% share in BDACS, a firm specializing in digital asset custody, which successfully issued the KRW-pegged stablecoin KRW1 on September 17, as part of a proof-of-concept with Woori Bank.
Regulatory Developments
As these developments unfold, South Korean financial regulators are preparing to introduce a bill to the National Assembly aimed at providing a regulatory framework for stablecoins. Expected to be presented by the year’s end, this legislation, referred to as the “phase 2 of cryptocurrency law,” would establish a coherent set of guidelines governing the issuance, launch, and management of won-pegged tokens.
In a significant statement earlier in October, Chairman Lee Eok-Won of the Financial Services Commission disclosed that, under the upcoming legislation, holders of stablecoins will not be permitted to earn interest on their tokens. This provision aligns with the U.S. GENIUS Act, which similarly restricts stablecoin issuers from providing yields to holders.
