Good Morning, Asia. Here’s the latest market news: South Korea’s decision to shift focus from a central bank digital currency to private stablecoins has stirred activity among fintechs and banks. KakaoBank is considering roles in issuance and custody, while Upbit and Naver Pay are collaborating on a token to address the “kimchi premium” gap in crypto prices. With Korea expanding FX trading hours and aiming for greater foreign market participation, a regulated KRW stablecoin could enhance banking and digital asset market integration. However, the hurdle lies in Korea’s onshore-only currency, limiting the international use of any Won stablecoin due to strict trading regulations since the 1997 Asian Financial Crisis. For a Won stablecoin to operate effectively, it must be restricted to whitelisted, KYC-verified addresses associated with Korea. The dominance of a privately issued stablecoin could undermine a country’s currency control and central bank functions, affecting economic stability. Although domestic transfers in Korea are efficient and widely used, a KRW stablecoin may offer limited utility domestically without significant advantages in speed or cost. The focus would then shift to cross-border settlement, where the onshore-only restriction poses challenges. Similarly, Taiwan’s NTD faces similar limitations, hindering its utility as a stablecoin. While a Won or NTD stablecoin may emerge in the future, its role is likely to be niche and confined to domestic use rather than the global crypto market. In contrast, a Hong Kong Dollar stablecoin could have broader usage due to fewer restrictions on its international use. As the demand for non-USD stablecoins evolves, the market is monitoring the potential role they may play in the broader crypto economy. In other news, market movers like BTC, ETH, Gold, Nikkei 225, and S&P 500 are showing positive trends, with various developments in the crypto space making headlines.
South Korea’s Stablecoin Strategy Faces Hurdles Due to Onshore Won Policy
