Following reports that South Korea is preparing to launch a legal framework for stablecoins in October, top executives from some of the country’s biggest financial groups are set to meet with executives from stablecoin giants Tether and Circle Internet Group this week.
Tether issues USDT, while Circle issues USDC, the world’s two largest stablecoins by market capitalization.
According to Korean news agency Yonhap, the executives will discuss the potential distribution and use of dollar-pegged stablecoins in South Korea. The meetings will also cover the issuance of stablecoins backed by the country’s currency, the won.
The CEO of Shinhan Financial Group, Jin Ok-dong, and Hana Financial Group CEO Ham Young-joo are set to have separate meetings with Circle President Heath Tarbert on Friday. Ham is also reported to be meeting an unnamed official from Tether later on Friday.
Meanwhile, KB Financial Group’s Chief Digital & Information Technology Officer Lee Chang-kwon and Woori Bank President Jeong Jin-wan are also said to be planning a meeting with Circle’s President, though an official date has not yet been set.
Rajiv Sawhney, Head of International Portfolio Management at Wave Digital Assets International, thinks the development is an “interesting” one considering how South Korea’s regulators have treated crypto in the past.
“Regulators there have historically blocked foreign institutions from registering and operating in the region,” he told Decrypt. “It’s a very domestic market, and the exchanges there are only allowed to list spot products, not perpetuals or leverage trading.”
He points out that Upbit, the country’s largest exchange, is entirely Korean owned and operated, and its listings are primarily quoted against Korean won fiat.
South Korea and stablecoins
Despite the East Asian nation’s current President Lee Jae-myung being widely considered crypto-friendly, the appropriate legal frameworks have proved politically controversial in the country. Under his presidency, Bitcoin ETFs have headed toward legalization in the country, while crypto KYC and AML oversight has been ramped up.
The country’s ruling party and the opposition party have both expressed different opinions about how to regulate the area, with the opposition Democratic Party debating the use of interest-generating stablecoins and the enforcement of strict capital limitations.
Meanwhile, executives from Korea’s central bank have mulled linking its deposit tokens to a public blockchain, enabling them to “coexist” with stablecoins issued by the private sector.
But these issues haven’t stopped some Korean companies from already preparing to issue their own stablecoins, with South Korean internet conglomerate Kakao recently registering trademarks for a Korean won stablecoin.
Sawhney argued that a joint venture or partnership between Circle or Tether and one of the banks would allow them to “maintain their market share in the stablecoin space” versus South Korean fintech firms issuing their own won-based stablecoins.
