A South Korean government official has reportedly disclosed that around 10% of the country’s domestic trade transactions are conducted using stablecoins, specifically Tether (USDT).
Ki Young Ju, founder of CryptoQuant, disclosed this today. The report highlighted the growing use of stablecoins in South Korea’s trade and noted that traders find stablecoins appealing due to their low fees, fast transaction speeds, and bypassing South Korea’s strict foreign exchange regulations.
Moreover, using stablecoins, traders avoid SWIFT costs, currency conversion fees, and delays associated with traditional methods.
TRON-Based Tether Leading the Charge
Amid this disclosure, Ki Young Ju noted that USDT holds a 72% share of the stablecoin market. Notably, most transactions occur on the TRON blockchain rather than Ethereum.
For instance, Tether minted $1 billion worth of USDT on Tron in one transaction two days ago. Meanwhile, the stablecoin issuers minted other lower values in units of $50 million on Ethereum.
Moreover, data from Defillama indicates that Tron-based USDT accounts for 49.52% of Tether’s $120 billion supply, while Ethereum comes in lower at 39.13%.
The preference for TRON-based USDT is attributed to its lower transaction fees and faster processing speeds, making it an ideal choice for trade. Young Ju stated that the choice of TRON for USDT transactions reflects a strong product-market fit. This highlights how TRON’s scalability and cost-effectiveness make it particularly attractive to businesses.
Korean govt official: “10% of domestic trade txns uses stablecoins.”$USDT dominates 72% of the stablecoin market, mainly on TRON blockchain, likely for its speed and low fees over ETH.
For whatever reason, the market chose #Tether and #TRON; they found a product-market fit. pic.twitter.com/pcfzniTGbS
— Ki Young Ju (@ki_young_ju) October 31, 2024
Concerns About Stablecoins’ Role in South Korea’s Trade Transactions
Notably, stablecoins in South Korea’s financial landscape help businesses bypass the lengthy procedures and fees associated with traditional currency exchanges. They offer near-instant transfers and minimal costs, providing businesses greater flexibility and efficiency in cross-border trade.
However, the growing reliance on stablecoins raises concerns for regulators. As stablecoin transactions bypass traditional banking channels, tracking the flow of funds becomes increasingly complex. According to the report, this could potentially lead to inaccuracies in national trade and capital flow statistics.
Economists are also worried that during times of economic volatility, South Korean assets could be quickly converted into stablecoins and moved offshore, which could impact the nation’s foreign currency reserves.
Lee Chang-Yong, the governor of the Bank of Korea, warned last year that stablecoins could increase volatility in cross-border capital movement, posing a threat to South Korea’s monetary sovereignty.
