In brief
- KakaoBank is building the systems needed to support a KRW stablecoin and tokenized assets.
- Kaia has registered trademarks for multiple won-pegged coins as legislation nears passage.
- A bank-issued stablecoin could offer fast transfers while meeting Korea’s strict capital-flow rules, Decrypt was told.
KakaoBank is reportedly preparing the groundwork for a Korean won-backed stablecoin, developing the infrastructure ahead of new rules that could let banks bring regulated digital KRW into Korea’s retail and cross-border payments system.
An affiliate of Kakao Corp, South Korea’s most dominant internet firm, the bank is reportedly advancing work on a smart contract FX settlement system that could form the basis of its planned KRW-backed stablecoin, according to an exclusive from Seoul-based financial news outlet Newspim.
Decrypt has reached out to Kakao Corp, as well as to representatives at Kaia, its blockchain development partner formed from Kakao’s own Klaytn network and LINE’s Finschia network.
The bank is reportedly building out the technical base needed to support on-chain financial services, with work spanning smart contract execution, token standards, full-node operations, and the back-end systems required to issue and manage digital assets.
Work on these aspects are aimed at supporting both a Korean won stablecoin and tokenized securities, positioning the bank to run its own infrastructure instead of relying on external networks, per the local report.
Earlier in August, Kaia, Kakao’s blockchain partner, made trademark registrations for at least four Korean won-pegged stablecoins.
“Discussions related to stablecoins are extremely sensitive right now, so I’m not able to comment on the article,” Sam Seo, chairman at the Kaia DLT Foundation, said in a statement shared with Decrypt. “For now, the only thing I can share is that Kaia is in talks with several teams in Korea about a KRW stablecoin POC.”
Seo added that counterparties have “requested strict confidentiality,” and cited difficulties over disclosing any other detail. “Separately, Kakao is the institution that holds the largest amount of KAIA tokens, and we will discuss ways to collaborate,” he noted.
Seo’s statements were first posted on Kaia’s public Discord server.
Developments for these possible offerings could set the stage for KakaoBank to fuse its banking, payments, and platform services to an eventual stablecoin system once Korea’s pending legislation opens the market, even as Korean financial authorities warn of associated risks.
South Korea and stablecoins
While stablecoins could help “automate transactions” and provide “real value” across payments and finance, “Korea’s strict laws on sending money overseas” remains the “biggest hurdle,” Joony Koo, co-founder and CEO of Spacebar.xyz, a gamified web3 meta frontend, told Decrypt.
”A bank-issued coin might be the only way to offer fast, 24/7 transfers that still satisfy regulators who are very strict about tracking capital flow,” one that could help build a “compliant bridge for money to move.” Koo added.
Traditional banks in Korea, such as Shinhan and Kookmin, are working together to “share the risk and handle regulations together,” he said, noting that KakaoBank appears to be “doing the opposite“ and is instead “playing to their strength in retail.”
“Unlike other banks, Kakao owns the country’s biggest chat app and a major payment system,” Koo said, adding that, “They can put stablecoins right where people already spend their time, making it much easier for regular users to adopt.”
Citing other major partnerships and mergers in the country’s converging crypto and finance sectors, such as that between Naver and Upbit, Koo noted that these companies appear to be priming to compete.
“For these big tech giants, adding digital assets to their business isn’t just an option anymore—it is a ‘must’ to stay ahead in the market,” he said.
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Source: https://decrypt.co/350068/kakaobank-pushes-forward-with-korean-won-backed-stablecoin-plans
