Growing debate in Seoul’s policy and financial circles is putting stablecoins in the spotlight as lawmakers and companies push to accelerate their adoption.
UBS analysts say momentum is building, with the ruling party submitting bills that would establish a legal framework for digital assets, including won-pegged stablecoins.
Expectation has also risen since the inauguration of the new president in June and the appointment of the former CEO of Hashed Open Research, a blockchain-focused think tank, as chief policy officer.
Supporters argue Korea cannot afford to lag as other financial hubs like Hong Kong and Singapore prepare their own regimes. They stress that foreign currency stablecoins are already circulating in Korea and could undermine the won’s role if left unchecked.
On the other hand, the Bank of Korea has warned of risks ranging from coin runs and operational failures to capital flight and weaker monetary policy control.
Despite official caution, private and public initiatives are multiplying. Dunamu, operator of the Upbit exchange, has teamed with Naver Financial to issue a stablecoin, while KakaoPay (KS:377300) and KakaoBank (KS:323410) affiliates have registered trademarks for their own.
Eight traditional banks, including KB Financial Group (KS:105560) and Shinhan Financial Group (KS:055550), have also joined forces to launch a won-pegged token, even pausing a central bank project on tokenized deposits.
UBS expects payments to be the first segment penetrated by stablecoins, given lower fees and faster settlement compared to cards. In their base case, circulation could reach 80 trillion won by 2030, equal to 5% of non-cash payments.
An upside scenario sees as much as 128 trillion won if issuers share interest income with users, while a downside view limits issuance to just 8 trillion won if banks dominate and incentives remain weak. UBS estimates reserve income for issuers could range from 1 trillion to 2 trillion won by 2030 depending on interest rates.
History suggests government policy could accelerate adoption. Tax breaks once helped credit and debit cards gain traction, and UBS analysts say similar measures for stablecoin spending would encourage usage.
“Transaction costs are likely to be lower than of credit card or debit card. Merchants could receive payments faster,” analyst Gil Kim said in a note.
If regulation allows fintechs to issue tokens, they may outpace banks. Firms like KakaoPay and NaverPay already control significant digital payment share and have strong distribution networks.
Kim notes the most competitive players will be those that internalize the ecosystem — from blockchain and custody to wallets and payments — with Kakao seen as one of the few already close to that model.
The analyst argues that a few large players are likely to dominate, echoing trends in e-commerce and social media, with network effects and compliance requirements limiting the field.
In sum, while stablecoins could reshape Korea’s payment system, much depends on how parliament resolves the tension between financial innovation and systemic risk. For now, expectations are high, but the eventual balance of benefits and risks remains unsettled.