The domestic and international financial and cryptocurrency markets are currently experiencing turmoil due to a series of stablecoin crises and regulatory inadequacies. Korea’s first stablecoin, Terra (UST), created by Do Kwon, serves as a prime example. It attempted to maintain its peg not by backing with fiat currency USD, but by relying on its own issued LUNA tokens as collateral. Launched in 2018, Terra shook the global market but eventually “perished” in 2022, losing trust altogether. This case starkly exposed the vulnerabilities inherent in the design of some stablecoins, prompting the crypto industry to explore new strategies to circumvent regulatory and market oversight, resembling high-stakes gambling rather than a stable financial system.
In 2022, WEMADE launched WEMIX$, adding another chapter to this story of instability. Backed fully by USDC, this stablecoin was issued without formal regulatory approval, raising concerns about regulatory evasion. As of 2025, WEMIX$ now circulates through a bridging process where USDC is transferred on Ethereum, then burned, and an equivalent amount of USDC.e is issued on the WEMIX 3.0 mainnet. WEMADE has clarified the process of holding USDC before issuing USDC.e, which further amplifies liquidity. However, the pressing issue remains: are these technical arrangements genuinely compliant with legal standards, and are proper oversight and audits being conducted?
In Korea, the legal framework for stablecoins has yet to be enacted by the National Assembly. Despite this, WEMADE’s provision of exchanges via USDC.e raises concerns that the company may be exploiting regulatory gaps. The incident involving the bridge hack, which resulted in losses for WEMIX$ holders, has further shaken market trust. Questions arise about whether audits and regulatory compliance are being enforced adequately amid this opaque landscape.
Hyoung-Joong Kim, Head of Cryptocurrency Research Center at Kookmin University. “Issuing stablecoins without regulation and oversight will inevitably lead to diminished trust and market collapse.” The urgent need for comprehensive regulation and corporate transparency extends not only globally but also within Korea. For the stablecoin industry to genuinely develop, establishing robust safety mechanisms and clear legal frameworks is essential. Without these, history warns us that market collapses similar to Terra’s can recur at any moment, risking the stability of the entire financial system.
