South Korea’s top financial holding companies are racing to partner with big tech companies as they gear up to launch stablecoin projects amidst industry hype.
Summary
- Major South Korean banks, including KB, Shinhan, Hana, and Woori Financial Groups, have begun partnering with tech giants like Naver, Kakao, and Samsung to build infrastructure for issuing and managing stablecoins.
- Regulators are already preparing to submit the country’s first stablecoin bill by the end of this year, which would serve to clarify issuance rules and prohibit yield-earning stablecoins.
In a recent report by The Korea Times, four of the largest financial institutions in the country have started forming corporate partnerships with technology giants The collaborations pertain to the four firm’s growing interest to capitalize on the imminent stablecoin boom sweeping the global markets.
According to the report, industry officials noted that KB Financial Group, Shinhan Financial Group, Hana Financial Group and Woori Financial Group have all pursued partnerships with big tech companies like Naver, Kakao, and Samsung Electronics to set up technological infrastructure necessary to launch stablecoins or facilitate transactions.
Even though the use of stablecoins have not been formally recognized as a payment system by the government, domestic stablecoin transaction volumes have already reached more than $41.15 billion in the wake of growing adoption in the financial sector.
A South Korean industry official told the media that partnering with big tech firms are an essential step in developing the technology necessary for stablecoin issuance, as banks would need a considerable amount of time to build their own infrastructure
“Tech giants, on the other hand, already have strong platform ecosystems and are best positioned to secure practical use cases once stablecoins are issued,” said the industry official.
At the moment, talks of issuing stablecoins pegged to the Korean won have mostly centered around banks as one of the most favored options to become primary issuers of the token. Though, whether stablecoin issuance would be done through a consortium of banks or individual entities remains to be seen.
Meanwhile, fintech companies are seen as only technical partners in the stablecoin wave.
So far, KB, Shinhan and Hana have entered partnerships with South Korean internet conglomerate Naver on joint product launches as well as other initiatives. Not only that, these firms have also started exploring ways to expand on partnerships with Dunamu, the operator of Korea’s largest cryptocurrency exchange Upbit.
Meanwhile, Woori has started expanding on its long-standing partnership with Samsung Electronics, specifically the company’s digital wallet firm Samsung Wallet. Unlike Naver and Kakao, which are expected to enter the crypto market via financial groups, Samsung Electronics already has the operational capacity to issue and manage coins.
Woori Financial Group also holds a 5% stake in the digital asset custody firm BDACS. BDACS launched the KRW-pegged stablecoin KRW1 on Sept. 17 in a successful proof-of-concept conducted in partnership with Woori Bank.
South Korean regulators inch closer to stablecoin bill
At press time, financial regulators are gearing up to propose a bill that would serve to regulate stablecoins to the National Assembly. The bill, dubbed “phase 2 of cryptocurrency law,” is expected to be submitted to the assembly by the end of this year.
The proposed South Korean bill would provide the country with its first unified framework for stablecoin issuance. It is poised to bring clarity to how won-pegged tokens can be issued, launched, and managed by institutions.
In October, the South Korean Financial Services Commission Chairman Lee Eok-Won announced that under the proposed rules, stablecoin holders will no longer be allowed to earn yield through holding tokens. The provision mirrors that of the GENIUS Act in the U.S, whih also bans stablecoin issuers from offering interest or yield to holders.
