[Part 1] Hegemony of Stablecoins: Global Stablecoin Dominance and US Regulatory Reforms
[Part 2] Hegemony of Stablecoins: KRW Stablecoins at the Crossroads of Innovation and Regulation
[Part 3] Hegemony of Stablecoins: Ethereum’s 'Meta Transactions' as the Key to Cost Innovation
[Part 4] Hegemony of Stablecoins: The Future of Finance Lies in Cars and AI
[Part 5] Hegemony of Stablecoins: Why is South Korea Considering Issuing Won-Based Stablecoins?
Recently, a commentary by Professor Hyoung-Joong Kim, the head of the Cryptocurrency Research Center at Kookmin University, drew attention during a YouTube broadcast. He clearly expressed his perspective on the issuance of won-based stablecoins. While some might see this as a straightforward call for Korea to jump into the stablecoin market, Kim emphasized the importance of understanding the practical limitations and strategic considerations involved.
Prof. Kim pointed out that the idea of domestic companies competing directly with dollar-based stablecoins is akin to “swallowing a camel to chase a gnat.” In other words, aiming to establish a top-tier stablecoin in the global market using won as the backing currency is an enormous challenge—comparable to a camel passing through the eye of a needle. Given Korea's relatively low international standing relative to the US dollar, it is highly unlikely that a won-denominated stablecoin could rank within the top ten in the world, let alone challenge incumbent giants.
He emphasized that for domestic firms desiring to be big players in the dollar stablecoin arena, the strategic starting point should be the United States. If an entrepreneur can mobilize billions of dollars to issue a USD-pegged stablecoin, such as USDK, immediate entry into the top five worldwide is feasible. This approach offers strategic leverage—by purchasing U.S. Treasury bonds with the raised funds, it might even influence trade negotiations or tariff disputes with the U.S., especially at a time when such negotiations are critical for national interests. For instance, sending billions of dollars to the U.S. is not just about investment; it could serve as a bargaining chip.
This strategic insight highlights a fundamental weakness in focusing solely on issuing won-based stablecoins: Korea’s limited global influence and market size. Kim stressed that the international stature of the won is comparatively weak, and merely issuing a stablecoin for the domestic market would be a limited venture. To truly enhance Korea’s currency's stature, expanding into global markets and fostering foreign demand for won-based assets is essential.
He further pointed out that the Korean government also aims to increase domestic bond issuance, and that stablecoin issuers could purchase Korean government bonds using their reserves. This would be beneficial for the government, especially if overseas demand for won-based tokens increased, leading to greater foreign currency inflows. Such inflows could be exchanged into won within Korea and used to purchase local assets—like a large volume of KRW tokens on platforms like Binance or Coinbase—thereby strengthening the domestic currency’s global footprint.
From a macroeconomic perspective, Kim highlighted that Korean government bonds and overnight repurchase agreements tend to offer lower interest rates than in the U.S., making dollar-pegged stablecoins more profitable than won-based ones in many cases. Nevertheless, he warned against viewing Won stablecoins as an invariably ‘golden goose’ that guarantees success. The risks are significant: massive capital investment is required, and if the demand isn’t sufficient, it could result in substantial losses.
Prof. Kim concluded by expressing cautious optimism about the potential for small but resilient success stories within the Korean domestic digital asset market, especially when combined with specific industry applications such as gaming or content. He pointed out that in the future, the era of programmable peer-to-peer money is inevitable. While the path is fraught with challenges, he hopes that Korea’s efforts eventually lead to global competitiveness and growth—perhaps even akin to becoming a “Goldman Sachs” of the digital asset world.
Overall, Hyoung-Joong Kim’s commentary underscores the importance of strategic planning, the limitations of a solely domestically focused approach, and the need to think bigger—particularly by leveraging the U.S. market and global financial systems—to elevate Korea’s position in the stablecoin ecosystem truly.
You can find the Korean version of this article here.
