Korean Institutions Onchain: Stablecoins, Current Status and Next Steps

Transcript

Let's get the session started. I sat in on the earlier sessions, and all the previous panels were in English, but we'll be running this one in Korean, so please just sit back and enjoy. Before we begin, let's start with introductions. I'm Jinsol Bok, Head of Research at Four Pillars. I'd like to ask each of our panelists to briefly share what they're currently doing in blockchain at their organizations. Hello. I lead the Asia ecosystem and business at Base, the Ethereum Layer 2 scaling blockchain incubated by Coinbase. My name is Hyukjae Park, and my English name is David Park.

Thank you so much for inviting me here today. Hello. I'm Michael Cho, and I lead the business at Lambda256. Lambda256 provides blockchain infrastructure and data services, and you can think of us as a company that solves interoperability between institutions' legacy rails and onchain rails. Hello, I'm Wonyoung Her from the Corporate Development team at Toss. Our team reviews new businesses, equity investments, and M&A, and recently we've been looking closely at digital assets.

My role is less about reviewing the technical side of blockchain and more about how blockchain technology can actually create value in financial services, and under what regulations and business models this can become a reality. That's what I focus on. Thank you. Today's topic is the Korean won (KRW) stablecoin. Talking with many people in the industry, the KRW stablecoin in Korea is still a bit underwhelming, because there's no legislation yet, so no one is pursuing it in earnest yet. I sent the panelists some questions in advance, and they may be fairly obvious ones, but let's go through them

first, and if we have time left, I'll ask a few other questions as well. So first, regarding KRW stablecoins at your company or team, could you briefly introduce any businesses or initiatives you're working on? If internal policy makes that difficult, then from your own background, what opportunities do you see around KRW stablecoins? Please share briefly. Let's start with Wonyoung this time. As many of you know, I see the KRW stablecoin not as a single service, but as a new financial infrastructure rail that will replace, or coexist with, existing financial infrastructure.

From the perspective of a fintech business looking at this rail, we're building technical capabilities to internalize at least the basic functions of the rail infrastructure. And how this infrastructure can actually bring onchain infrastructure together with existing financial infrastructure, we're validating that by running PoCs with partners. That's the stage we're at.

That's all from me. We're doing business in three main areas. Yes, that's right. Wonyoung just called it a new rail, and ultimately someone needs to operate services on the new rail and make that data usable for institutions. That's our first line of business. If institutions run wallets or stablecoin businesses, we operate the nodes on their behalf and deliver that data to them.

Second, it hasn't drawn much attention yet, but once stablecoins arrive, AML will be needed. AML means you ultimately have to analyze transactions, and you need a way for existing AML systems to analyze onchain transactions. So we focus on providing that connectivity. Third, there are many players: some issue, some distribute, some convert through off-ramps, and some convert foreign stablecoins into won via FX. There are all these players.

You need something that can orchestrate all these services, so those are the three angles from which we're pursuing the KRW stablecoin business. Base is a general-purpose, global public blockchain, so adopting compliant stablecoins from around the world is our basic direction. In the US, as the main distribution partner for USDC, we currently have 4.6 billion USDC issued among public blockchains, and besides Circle's USDC, there's PYUSD, and even non-dollar stablecoins: about 20 compliant stablecoins in total

are currently issued and circulating on Base. Payments are such an important utility for stablecoins that about 2.4— sorry, one moment — $4.4 trillion in monthly transaction volume, stablecoin-based transaction volume, is happening. For Korea, with various payment companies and financial institutions, we're running pilots or PoCs with USDC-based stablecoins first, and since KRW stablecoin regulation hasn't come out yet, we're doing paper testing on testnet.

Thank you. Thank you. Everyone is busy with PoCs and preparing infrastructure internally, as you've said. One more thing I'm curious about: if I recall the mood last year, interest in stablecoins from the government and many companies was really high, but it seems to have cooled this year, with institutions focusing more on tokenization, and interest in KRW stablecoins seems to have dropped a lot compared to early this year or last year.

Now, with talk of the government's bill coming out in September, everyone seems to be getting interested in KRW stablecoins again. What I'm curious about is whether companies are slow with KRW stablecoin businesses simply because of regulation, or because of business viability or other reasons. I'd love to hear your views on that. Let's start with Hyukjae this time. My role at Base is business development and partnerships, so having met many companies, my personal view is that demand for KRW stablecoins hasn't declined.

Rather, I think more institutions are interested and are actually testing. It's just that, without regulatory clarity, they can't disclose it publicly. Almost every financial institution seems to have a blockchain team, and they're building in-house dev teams to test various infrastructure. That's the stage they seem to be at. Beyond simple human-to-human payments, agent payments have also become a big topic right now. Even on agent payments, a lot of deep testing is already happening, more than you'd think. It hasn't reached the media yet, but demand is stronger than expected, and they're building multiple use cases.

I'll go second again this time. First, I think there's a reason it looks like things have quieted down. When KRW stablecoins came up last year, and many institutions are probably here today, most financial institutions completed one or two PoCs. Having run them once, I think they've already experienced enough to say, "OK, we get how KRW stablecoins are issued, minted, and circulated on a blockchain."

To move beyond that, without the legislation it's hard to go further. So when it comes to what to actually do, rather than going quiet, they seem to be discussing bigger things. What I wanted to explain next ties into business viability. Honestly, there aren't many easy business cases with KRW stablecoins. From our many PoCs, Korea's card payment networks and payment systems are extremely well developed.

So you could innovate on these with KRW stablecoins, but significantly growing revenue from that doesn't look easy. That's also tied to the legislation. For example, how can reserves be managed? Can the income from reserves be shared with distributors? And rather than using stablecoins as collateral, can they work like debit cards that leverage the existing credit card networks?

Since the legislation isn't clear on these business models being used overseas, it's very hard to plan businesses with clear viability. So even amid all this, they're quietly looking for things that show some business viability. Yes, I also agree with a lot of what the two speakers before me said. Rather than saying interest in stablecoins has cooled compared to last year, if up to last year was a time to dream about the potential of stablecoins, now is the time to start thinking about what business to actually build and what services

to launch. And to work through that, as you said, there's a lot to consider: who will issue stablecoins, which regulations to comply with, how far financial institutions can go, how on/off-ramps will work, how liquidity will be provided. As they work through all of this together, rather than signaling interest externally, they're internally laying plans to actually run the business, so I think that's why it isn't very visible from the outside. And these plans could be their own business know-how and trade secrets, after all.

So from that perspective, they're building internal strength. And what's especially important here is that, as I said, stablecoins are a new financial rail, but as you mentioned, Korea's financial system is so well developed that we need to ask whether people will use it just because a stablecoin rail has been laid. What service should we build to deliver value to users, be chosen by users, be used continuously, and have the economics to be sustainable? As they think all that through, this is probably not a time for active external promotion but for a lot of internal deliberation.

Yes, thank you. What the three of you said leads naturally into my last question. CBO Michael Cho talked about business viability, and you all mentioned preparing KRW stablecoin businesses within your companies. So, lastly, whether this year or next, once the Digital Asset Basic Act actually passes and companies pursue stablecoin businesses, what will matter most? For a successful stablecoin business, what do you consider most important? Or, within your current company, which sector are you watching most closely, such as agent payments

or payments in general? Please share as a final word. This time, let's start with Wonho. I'm a bit cautious saying this, but I'd like us to separate the KRW stablecoin from stablecoins in general. The KRW stablecoin is a means, not an end. When I was young, there was the slogan of "building the nation through exports" and the "$1 million export tower" award. Is Korea's export product the won, or is Korea still a country that exports and earns dollars? Not forever, but if we think about it that way,

then on Ethereum, which has global liquidity as we heard today, what should Korea bring onchain, whether financial products or cultural products, to tap global liquidity and access? What would work better? We need to think about that. It's not that we shouldn't do KRW stablecoins. Second, in connection with AI, domestic financial institutions' legacy ledgers are extremely closed. That makes them very hard for AI to use, and very hard to access globally.

So don't look at blockchain and stablecoins simply as something tokenized; see them as an open ledger that's very usable in the AI era: transparent, and, crucially, with deterministic code already written so it can't behave otherwise. It's that kind of payment system, and in that light, discussing KRW stablecoins would be far more productive, I think.

Following on, I fully agree with Director Cho. Ultimately, the essence of stablecoins is programmable money. There must be use cases where ecosystem players can use stablecoins permissionlessly, and those are actually what create more demand. But if everything is controlled rather than on public blockchains, there will naturally be limits to distribution, and then demand just can't form. Dollar-based stablecoins already have so many huge success stories.

And those stablecoins are all on public blockchains, where diverse market participants build various financial stacks that create demand for them, and with many products for retail, lots of innovations let people adopt those stablecoins and earn more. That's the global megatrend, and many advanced countries, including the US and Japan, have already adopted this approach. So the KRW stablecoin shouldn't be limited to simple payments; designing the framework to keep its expansion potential open is the most critical thing, I think.

I recently read a report saying that, after the US dollar, the currency in which crypto is traded most is the Korean won. That shows how powerful Korea's centralized exchanges are, and Korean retail, as early tech adopters and, in a sense, early finance traders, generates real volume. If that pairs well with the KRW stablecoin for use on public blockchains in various financing and trading, it would be great to have a period, even a temporary one, to test the KRW stablecoin's scalability.

That would be really good. I think the KRW stablecoin can generate enough demand, second only to the dollar. That's my view. At Base, our strategy this year is trading, financing, and payments. Financial stacks are all connected and correlated, aren't they? So for all stablecoins, being able to borrow stablecoins through collateralized loans, creating that kind of demand, could be the key factor in the success of the KRW stablecoin.

I'd like to speak from the perspective of a business operator. To answer the question faithfully: what's most important for a successful KRW stablecoin business? Rather than one most important thing, there seem to be about three necessary conditions for a successful business. First, access to infrastructure; second, building services that users will choose; third, the ability to distribute them to users and venues. Those three seem necessary.

First, since this is a service on a new financial rail, whether you build the rail yourself or borrow an external platform provider's, you need the right to access it affordably, I'd say. Second, as I keep saying, building a KRW stablecoin rail and having users choose it are different matters, so you need services users will choose and keep using. And third, connecting those services to many B2C users and to B2B venues where they can actually be used.

The distribution capability to do that is what matters, I think. So none of the three can be missing, and as I say this, all three are things Toss does well, so we'll work hard to help the KRW stablecoin succeed. Thank you. Yes, thank you. We've run slightly over time, so let's wrap up quickly. Please give a big round of applause to our panelists for their valuable time today. Thank you. Yes, a big round of applause, please.