The United States has embarked on a "race for stablecoins" to secure dominance in the digital currency market. A legal framework has been established allowing private entities to issue dollar-pegged digital currencies, backed 1:1 by safe assets such as cash and short-term government bonds. The "Clarity for Payment Stablecoins Act," which has passed the House Financial Services Committee, marks the first federal legal milestone in organizing the issuance, backing assets, and oversight of stablecoins. Market analysts predict that the dollar stablecoin market could grow to $1 trillion by around 2027. This initiative is not merely about regulating virtual assets; it represents the beginning of institutionalizing dollar supremacy in the digital age.
Stablecoins are not speculative assets like Bitcoin, which aim for price volatility. Instead, they are digital payment instruments closely tied to the value of fiat currencies like the dollar or won, used for payments, remittances, and settlements. International remittances could become faster, and transaction costs between businesses could be significantly reduced. Just as the internet and mobile technology have replaced bank branches, blockchain-based payment networks have the potential to transform existing financial infrastructure. The urgency for the U.S. to advance in this market is clear: as stablecoins grow, the demand for U.S. Treasury securities as backing assets increases, thereby expanding the use of the dollar in the digital space. Analysts suggest that dollar-based stablecoins could disrupt financial systems and capital flows in emerging markets.
In contrast, South Korea's response remains mired in caution and inter-agency disagreements. Discussions are ongoing about whether to allow won stablecoins solely through banks or to open the door to fintech and big tech companies, as well as how to reflect concerns about monetary policy and financial stability from the Bank of Korea. The central bank maintains that if a won stablecoin is introduced, it should start strictly with regulated institutions like banks. Financial authorities have also been considering a bank consortium approach, but perspectives in the National Assembly and the industry remain divergent.
While caution is not inherently wrong, it should not serve as a justification for delays. The U.S. has chosen to acknowledge risks while bringing them into a regulatory framework. They are defining the issuers, backing assets, redemption obligations, and oversight systems first, then growing the market. Meanwhile, South Korean users are already using dollar stablecoins in their daily transactions. Without a regulated alternative in won, the market will naturally gravitate toward dollar-based services. This is not merely a question of leadership in the virtual asset industry; it poses a national risk of diminishing the presence of the won in digital payment networks.
South Korea must pursue two objectives simultaneously. First, it needs robust safety measures: 100% backing of assets, segregation of customer assets, continuous disclosure, external audits, immediate redemption obligations, and anti-money laundering standards should be fundamental. Legal provisions must ensure that user assets are fully protected even in the event of issuer bankruptcy. Second, it should allow controlled experimentation. The Bank of Korea's ongoing tests for the usability of Central Bank Digital Currency (CBDC) should be linked to starting experiments within the banking sector, while gradually opening pathways for qualified fintech and payment service providers. Limiting participation to banks may enhance stability but could slow innovation. Conversely, unrestricted access could undermine trust. The solution lies not in prohibition but in strict licensing and differentiated regulation.
A won stablecoin could become the future infrastructure of South Korean finance, or it could devolve into a secondary market for dollar stablecoins if neglected. What is needed now is neither vague optimism nor excessive fear. If South Korea continues to engage in discussions while the U.S. moves both legally and in the market, the competition may already be lost. This is a pivotal moment for the reorganization of digital financial order. To protect the territory of the won in digital payment networks, the government's regulatory pace and the industry's innovation speed must accelerate significantly.
Stablecoins are not speculative assets like Bitcoin, which aim for price volatility. Instead, they are digital payment instruments closely tied to the value of fiat currencies like the dollar or won, used for payments, remittances, and settlements. International remittances could become faster, and transaction costs between businesses could be significantly reduced. Just as the internet and mobile technology have replaced bank branches, blockchain-based payment networks have the potential to transform existing financial infrastructure. The urgency for the U.S. to advance in this market is clear: as stablecoins grow, the demand for U.S. Treasury securities as backing assets increases, thereby expanding the use of the dollar in the digital space. Analysts suggest that dollar-based stablecoins could disrupt financial systems and capital flows in emerging markets.
In contrast, South Korea's response remains mired in caution and inter-agency disagreements. Discussions are ongoing about whether to allow won stablecoins solely through banks or to open the door to fintech and big tech companies, as well as how to reflect concerns about monetary policy and financial stability from the Bank of Korea. The central bank maintains that if a won stablecoin is introduced, it should start strictly with regulated institutions like banks. Financial authorities have also been considering a bank consortium approach, but perspectives in the National Assembly and the industry remain divergent.
While caution is not inherently wrong, it should not serve as a justification for delays. The U.S. has chosen to acknowledge risks while bringing them into a regulatory framework. They are defining the issuers, backing assets, redemption obligations, and oversight systems first, then growing the market. Meanwhile, South Korean users are already using dollar stablecoins in their daily transactions. Without a regulated alternative in won, the market will naturally gravitate toward dollar-based services. This is not merely a question of leadership in the virtual asset industry; it poses a national risk of diminishing the presence of the won in digital payment networks.
South Korea must pursue two objectives simultaneously. First, it needs robust safety measures: 100% backing of assets, segregation of customer assets, continuous disclosure, external audits, immediate redemption obligations, and anti-money laundering standards should be fundamental. Legal provisions must ensure that user assets are fully protected even in the event of issuer bankruptcy. Second, it should allow controlled experimentation. The Bank of Korea's ongoing tests for the usability of Central Bank Digital Currency (CBDC) should be linked to starting experiments within the banking sector, while gradually opening pathways for qualified fintech and payment service providers. Limiting participation to banks may enhance stability but could slow innovation. Conversely, unrestricted access could undermine trust. The solution lies not in prohibition but in strict licensing and differentiated regulation.
A won stablecoin could become the future infrastructure of South Korean finance, or it could devolve into a secondary market for dollar stablecoins if neglected. What is needed now is neither vague optimism nor excessive fear. If South Korea continues to engage in discussions while the U.S. moves both legally and in the market, the competition may already be lost. This is a pivotal moment for the reorganization of digital financial order. To protect the territory of the won in digital payment networks, the government's regulatory pace and the industry's innovation speed must accelerate significantly.
* This article has been translated by AI.
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