Korea Institute of Finance Says Korean Won Stablecoin Use May Reach Only 4.4% Without Added Benefits

A Korean won stablecoin may see limited use in actual payments unless it offers additional benefits, according to a new analysis. Even if most merchants accept stablecoins, adoption may remain constrained if consumers see little advantage over credit cards.

The Korea Institute of Finance said in a report on the impact of stablecoin adoption on card-payment market share that a won-based stablecoin would have only a limited effect on the card-payment market, Money Today reported on June 22.

The report said usage would be nearly nonexistent under a non-custodial model, in which individuals hold stablecoins directly. To function as a payment method, stablecoins would need to be held under a custodial structure within an issuer's app or a card company's app.

Even under a custodial model, usage would remain low. If merchant acceptance is below 50%, the adoption rate is estimated at 13.2% and the usage rate at 1.1%. Even if merchant acceptance rises to 90%, adoption would reach 18.5% and usage only 4.4%.

Payment incentives also remain limited compared with credit cards. In South Korea, credit cards are accepted by 94.2% of merchants and offer average discount benefits of about 2.5%. They also provide installment-payment features.

The report also estimated that discounts would be needed to increase won stablecoin use. Assuming a 90% merchant acceptance rate, a 1% discount on payment amounts would raise usage to 6.4%, while a 2.5% discount would lift it to 12.9%. A 4% discount could push usage as high as 28.8% and reduce credit-card payment share by as much as 14.2 percentage points.

Still, steep discounts could become a burden for issuers. Because stablecoin operators often rely more on returns from managing reserves than on fee income, sustaining aggressive promotions over a long period could weaken financial soundness and increase reserve redemption risk.

Discussion over won stablecoins continues, but wider adoption in the payment market will require benefits consumers can clearly feel and greater ease of use. Delays in talks over the Digital Asset Basic Act, the proposed legal framework for the sector, are also a variable.