In response to the Trump administration’s promotion of dollar stablecoins, Korean banks have decided to create a joint venture to issue a joint Korean stablecoin. The banks involved include KB Kookmin, Shinhan, Woori, NH Nonghyup, IBK Industrial, Sh Suhyup and Korea Financial Telecommunications & Clearing Institute (KFTC).
KFTC operates the main retail payment systems in Korea. The only large Korean bank not mentioned is Hana Bank. But there is a catch. Currently, Korea doesn’t have stablecoin regulations, although there are plans to produce some later in the year. Hence, the talk of launching a stablecoin this year seems slightly premature.
The initiative is being coordinated by the Open Blockchain and DID Alliance, which formally announced the creation of a stablecoin working group with these participants. An association official said in a statement, “I understand that regulatory authorities are closely examining the institutionalization of stablecoins. We will create a trustworthy ‘stablecoin’ ecosystem through a collaboration with banks and support the revitalization of the domestic blockchain industry based on this.”
Seoul Business Daily reported an un-named banking official as saying, “If banks do not actively enter the market, the market could be formed around businesses that are difficult to control and trust. As a result, there are concerns about funds flowing out of deposits to stablecoins.” It’s worth recalling that Korea was the launch location for the failed Terra algorithmic stablecoin, which triggered a wave of crypto bankruptcies and contributed to the collapse of the FTX crypto exchange. So it’s conceivable that Koreans may be more wary of stablecoins than others.
