Banks, fintech firms forge alliances for won-based stablecoins

Automated teller machines of major commercial banks stand outside a building in Seoul, April 12. Newsis

Major financial institutions and fintech firms are exploring partnerships to gain an early foothold in the emerging stablecoin market ahead of the possible introduction of won-pegged stablecoins, according to industry officials Thursday.

Earlier this week, officials from KB Financial Group, Shinhan Financial Group, BNK Financial Group, Industrial Bank of Korea, Toss and iM Bank held a closed-door meeting Monday to discuss developments in digital asset regulations and strategies for responding to the emerging stablecoin market.

During the meeting, participants exchanged views on regulatory changes, the potential introduction of won-backed stablecoins and possible areas of cooperation.

KB Financial is said to be considering entering the won-backed stablecoin market in partnership with fintech platform Toss. Under the arrangement being discussed, KB Kookmin Bank would issue the stablecoin while Toss would oversee distribution.

Cryptocurrency exchange Bithumb, which currently maintains a bank account partnership with KB Kookmin Bank, is also viewed as a potential partner.

In May, Hana Financial Group announced plans to acquire a 6.55 percent stake in Dunamu, the operator of Korea's largest cryptocurrency exchange, Upbit, in a move widely viewed as an effort to build a digital asset ecosystem spanning issuance, distribution and payments.

These partnerships come as the National Assembly continues discussions on the Digital Asset Basic Act, the second phase of the country's virtual asset legislation. The bill seeks to establish a legal definition of digital assets and provide a broader regulatory framework for the industry.

While legislation remains pending, industry officials say the Bank of Korea (BOK)'s Project Hangang, a pilot project involving deposit tokens — bank deposits converted into tokenized form — could emerge as a key variable in the digital asset market.

If deposit tokens gain widespread adoption, demand for privately issued won-backed stablecoins could be limited.

BOK Gov. Shin Hyun-song recently appeared to cast doubt on the commercial viability of local currency stablecoins.

Speaking at a conference on Monday, Shin noted that "euro-denominated stablecoins account for less than 0.3 percent of the global stablecoin market by capitalization," in what was interpreted as an indirect expression of skepticism over the potential usefulness of won-backed stablecoins.