[Digital Today reporter Lee Ho-jung] Finance and fintech firms are stepping up competition to pre-empt the stablecoin market. Institutionalisation is delayed, but the market is moving first amid power struggles over monetary sovereignty in each country. Alliances are taking shape among domestic and overseas players that divide roles across the value chain, including issuance, payments, infrastructure and networks. The sector is also seeing wide-ranging tie-ups to build independent technology while lining up allies.

The Digital Asset Basic Act, centred on introducing stablecoins, is making little progress at the review stage in the National Assembly's Political Affairs Committee. The Democratic Party's digital asset task force wants to start discussions by putting the bill on the agenda of a subcommittee, but the timing is unclear as it coincides with a committee reshuffle and local election schedules. The Bank of Korea is holding to the so-called 51 percent rule, which would allow issuance only for consortia in which a bank holds at least 50 percent plus one share, citing financial stability. Some lawmakers and non-bank players disagree, calling for wider permission for fintech firms. Forecasts for implementation range from the second half of 2026 to after 2027.

BANKS: Move to pre-empt issuance rights by securing consortia and technology partners

Despite the delay in institutionalisation, banks are being driven by concerns that a deposit-based financial system could be shaken if stablecoins spread mainly through the private sector. Commercial banks including KB, Shinhan, Hana and Woori are taking part in the Bank of Korea's CBDC pilot project while also reviewing stablecoin-related infrastructure and business models.

Hana Financial Group has moved fastest in the race to secure consortia. It first grouped six banks, including BNK Financial, iM Financial, Standard Chartered First Bank Korea, OK Savings Bank and JB Financial. Given the 15 percent cap on holding stakes in other firms under the Banking Act, meeting the 51 percent requirement would require at least 4 to 5 banks, making it harder for later consortia to form if one side secures banks early. Hana Card signed a business agreement with Circle in December last year and has advanced to a real-transaction marketing stage. Hana Financial is also said to be reviewing the possibility of setting up a special purpose company as a future issuer.

KB Financial Group is putting more weight on expanding touchpoints with the global digital asset ecosystem. It completed a technical verification using Circle Mint, a stablecoin issuance and management platform run by Circle. It is also working to secure digital asset infrastructure, including participation as a major shareholder in Korea Digital Asset (KODA), a crypto custody company. On April 13, cooperation talks were also held with KB Financial executives to coincide with a visit to South Korea by Circle CEO Jeremy Allaire (제레미 알레어). More recently, it has discussed strategic cooperation in the blockchain sector with U.S. blockchain-focused investment firm Pantera Capital, broadening the scope of cooperation in the global blockchain ecosystem.

Shinhan Financial Group is discussing business plans across areas including technical verification and consortium formation, centred on its digital asset task force. It is said to have started preparation ahead of legislation and to be internally reviewing the direction for forming a consortium. Shinhan Bank has already run tests in the CBDC pilot, Project Hangang, linking a delivery app called Ttaenggyeoyo with insurance and card payments. That has prompted an assessment that it is pre-verifying everyday payment uses based on deposit tokens. It is also continuing preparations for multiple scenarios by filing related trademark applications.

Woori Financial has not formalised a consortium. It is said to be laying groundwork to secure digital asset infrastructure through an equity investment in BDACS, and is also reviewing applying digital asset payments to a ticketing platform called To the Moon that Woori Bank is preparing. The industry is paying attention to Woori Financial as a potential casting vote because the consortium landscape could be reshaped depending on whether it joins the Shinhan-Hana camp or the KB camp.

FINTECH AND EXCHANGES: Move to seize infrastructure first with mainnets and payment networks

Fintech firms and exchanges are focusing on pre-empting technical infrastructure rather than issuance rights. They judge that securing a mainnet would allow integrated operations within one network, from issuance to wallets, payments and services, effectively giving them platform leadership.

Dunamu (Upbit)'s Giwa Chain has already produced examples of cooperation with the financial sector. Shinhan Bank is shifting the qualification authentication system for its doctors-only credit loan, Doctor Loan, to one based on Giwa Chain and is targeting completion of the rollout in May. Hana Financial completed technical verification for overseas remittances using Giwa Chain and confirmed improvements in processing speed and costs compared with SWIFT. A comprehensive share swap between Dunamu and Naver Financial has seen its closing pushed back to Sept. 30 due to a prolonged antitrust review of a business combination. If the combination is completed, there are expectations that Naver Pay's annual 80 trillion won payment network and Upbit's distribution network could be tied into a single ecosystem.

Toss set up a blockchain-dedicated organisation in February, is reviewing building its own mainnet and is also developing a Web3 wallet. Toss is said to have discussed stablecoin payment cooperation with Bithumb, but concrete progress is reported to be limited as both sides prepare initial public offerings. Separately from Toss, Bithumb has signed an MOU directly with Circle and is also working to expand distribution of dollar stablecoins.

Kakao launched a groupwide stablecoin task force in August last year, co-led by CEO Jung Shin-a (정신아), Kakao Pay CEO Shin Won-geun (신원근) and KakaoBank CEO Yoon Ho-young (윤호영). KakaoBank Chief Financial Officer Kwon Tae-hoon (권태훈) said on a first-quarter earnings conference call on May 6 that KakaoBank is exploring various opportunities across the ecosystem, including issuance, custody and payments, based on banking infrastructure. He added that it is focusing on building an ecosystem together with Kakao and Kakao Pay. Its strength is cited as its ability to create a groupwide circular structure from issuance to distribution by having an internet bank, easy payments and a messenger service within affiliates.

In this landscape, Hecto Financial has already entered an execution stage ahead of legislation. In February it became the first South Korean company to join Circle's stablecoin payment network, the Circle Payment Network (CPN). It is currently the only domestic partner of CPN and is also participating as a payment company in Arc, Circle's stablecoin-dedicated infrastructure. With cross-border settlement structures already starting to operate, an assessment is emerging that it is positioned to expand into a hub for global settlement infrastructure if won stablecoin legislation is introduced.

"Same market, different strategies" - the battle for won-dollar leadership has already begun

In the current structure, in which strategies are split among banks for issuance, fintech firms and exchanges for infrastructure, and global players for networks, it is difficult for a single operator to dominate the market. Issuance alone makes it hard to spread, while payment infrastructure alone makes it hard to secure trust. The outlook is that competitiveness will depend on who first builds an ecosystem combining issuance, distribution and payments.

While South Korea remains at the system-design stage, the global market has already entered the payment infrastructure stage. Circle chose a strategy of transplanting dollar coin infrastructure by forging successive partnerships with domestic players such as KB Financial, Bithumb and Hecto Financial rather than directly issuing a won stablecoin. Some indicators show USDC outpacing USDT, suggesting the competitive landscape within the dollar stablecoin market is shifting. Tether is also reorganising its team, moving to hire staff for promotion and regulatory 대응 targeting South Korea. Dollar stablecoins have already started to link to some domestic payment and settlement infrastructure.

As the Bank of Korea emphasises defending monetary sovereignty and the National Assembly coordinates disputes over the bill, competition to pre-empt between won and dollar stablecoins is intensifying. In this structure, the side that secures payment and settlement infrastructure before legislation could hold an advantageous position in the future battle for market leadership. That would mean that even if a won stablecoin launches, it would have to compete with pre-linked dollar-based infrastructure. The market view is that legislation defines the market, but infrastructure pre-empts it.