Four banks in one consortium?… Won-denominated coin '51%% rule' dilemma [Hankyung Koala]

With momentum building to draft a bill to introduce a won-denominated stablecoin pegged 1 to 1 to the won, the core regulation and issuer qualification requirement known as the 'bank stake 51% rule' has been found to conflict with the current Banking Act. Legally, banks can only own up to 15% of a non-financial company's shares. Financial authorities have recognized the issue and begun preparing alternatives.

◆Banks should lead, but…

On the 2nd, according to financial and political circles, the ruling party and the government are seriously considering limiting the issuer of won stablecoins under the Digital Assets Framework Act to "a corporation in which banks have invested 51% or more of the shares." The idea is that a credible bank should hold a majority stake and control to ensure the stability of a won coin.

The problem is the current Banking Act. Article 37 of the Banking Act stipulates that banks may not own more than 15% of the voting shares of a non-financial company. This provision reflects the principle of separating finance and industry. If a stablecoin issuer is classified as a general corporation such as a fintech rather than a financial company, a single bank can hold at most 15%. That would mean at least four banks would need to participate in one consortium. A senior official at a commercial bank said, "The decision-making structure would become complicated, and it could make actual project progress impossible."

◆Designating it as a financial company seems difficult

To resolve this problem, the option of designating won stablecoin issuers as "financial companies" has been raised, but this too faces significant legal obstacles. Under the current Capital Markets Act, virtual assets are not yet recognized as financial investment products. If virtual assets are not financial products but won stablecoin issuers are designated as financial companies, it would create the contradiction of financial companies handling non-financial products. Moreover, financial companies are subject to strict governance laws, which would limit future business expansion such as acquiring subsidiaries.

In the end, including the issuer as a bank subsidiary under banking supervision regulations is expected to be the likely approach. However, if that happens, the won stablecoin issuer would not legally be a financial company, which could weaken the legal basis for enforcing internal controls or soundness regulations comparable to those for banks. An official from the Financial Services Commission said, "We are fully aware of this issue," and added, "During the bill discussion process, we will prepare practical supplementary measures with various options."

◆"Independent survival is impossible"

Even if banks hold 51% of the shares, it is reported that the largest shareholder could still be a general company such as a platform firm. This is because the Bank of Korea is said to hold the view that "the combined bank share can exceed 51%, and it is not necessary for a bank to be the single largest shareholder."

As the outline of the bill becomes clearer, behind-the-scenes maneuvering in the financial sector is expected to intensify. With the alliance between Naver and Upbit effectively solidified, other banks, platform companies, securities and card firms are accelerating their calculations of gains and losses. A finance industry official said, "No single party can survive on its own," and predicted, "When the bill is detailed, mergers and alliances will surface depending on interests."

Mi-hyeon Jo/Hyeong-gyo Seo/Jin-gyu Kang reporters mwise@hankyung.com