South Korea remains one of the strong crypto regions, making a return in 2025. Despite this, Kakaopay is facing headwinds on its stablecoin adoption.
South Korea is facing a resurgence of interest in crypto, reviving older projects and stablecoin usage. However, regulatory pressures are curbing some of the growth, especially when it comes to stablecoin issuers.
Recently, the shares of Kakaopay broke their 2025 rally, coming down from their peak. Kakao Pay Corp. traded at a peak of 93,800 KRW ($69.17), recently dropping to the equivalent of $62.09. The shares lost 15% in a single day after the company received warnings on its own attempts to use stablecoins. The stablecoin narrative boosted the share price by 200% in June, before the recent setback.
Kakao Pay Corp. broke its rally, after regulators warned fintech and crypto companies may not have an advantage in issuing stablecoins. | Source: Google Finance
Kakaopay was seen as the potential leader, benefitting from the new South Korean legislation on stablecoins. The news of a potential setback arrived after Kakaopay had filed a patent for a Korean won stablecoin, selecting the ticker KPKRW. The new requirement tying stablecoins only to commercial banks, however, means crypto companies will not have an advantage in launching the digital won.
The expectation of having a new Kakao-based stablecoin also boosted KAIA, the native token of Kakao’s new chain. KAIA rallied to a three-month high above $0.20, recently taking a step back to $0.17.
The South Korean market is more conservative, offering a predominance of fiat trading pairs. The ability to mint stablecoins remains limited, as South Korea’s central bank warned about the rushed unrolling of new assets. In the country, stablecoins can only be issued by licensed commercial banks, limiting the venue for DeFi projects and unregulated crypto-backed stablecoins.
Kakopay was considered one of the first potential issuers of a stablecoin. However, for South Korean companies, combining fintech with stablecoin payments is not as straightforward as in other regions.
Despite this, South Korean investors were still keen on the stablecoin narrative. In the past month, Circle (CRCL) became the most widely purchased foreign stock in the country, with $443M from Korean retail.
Kakao’s ecosystem still uses stablecoins for decentralized activities. Kaia chain carries $106M in bridged stablecoins, mostly USDT for decentralized transactions. Kaia’s stablecoins are used in other regions, with no limitations for on-chain tokens outside South Korea.
South Korea remains a crypto powerhouse in 2025
South Korean exchanges logged over $663B in trades for the year to date. The country remains one of the sources for retail adoption, with 22.6% to 30% penetration rate among regular users and retail traders.
The Korean Won still carries around 1.8% of BTC trading and over 2.5% of ETH volumes. The country’s exchanges also have a marked effect on altcoins, often following Upbit and Bithumb listings.
South Korean traders also draw attention to an entirely different selection of altcoins compared to other markets. The country remains a factor in reviving demand and providing use cases for multiple platforms from previous bull markets. With more conservative listing requirements, South Korean exchanges were not overwhelmed by a wave of memes, still providing liquidity for a shorter list of assets.
