[Reporter’s Notebook] South Korea Is Falling Behind in Digital-Asset Innovation

G20 Recasts Its View of Stablecoins

South Korea Must Speed Follow-Up Measures After Legislation

Cho Mi-hyun, Finance Reporter

“Digital financial innovation, including digital assets, can play a transformative role in supporting broad-based economic growth.”

That line appeared in the chair’s statement released after the G20 finance ministers and central bank governors meeting in Asheville, North Carolina, on September 1. The statement also said the private sector will play a key role in driving digital-finance innovation. China blocked the adoption of a joint communique, but it did not object to the section on digital-asset innovation.

That marks a notable change from a few years ago. When Facebook announced plans in 2019 to issue the Libra stablecoin, stablecoins quickly emerged as a new issue in international finance. At the time, the G20 held that stablecoins should not be issued until related risks were fully addressed. Even afterward, the group continued to place greater emphasis on financial stability and regulation. In just seven years, the G20’s view of digital assets has shifted toward innovation.

The latest statement is not a declaration that regulation should be eased. The premise remains the same: financial stability and trust in monetary and payment systems must be preserved. What has changed is the regulatory perspective. Rather than stopping at risk control, authorities are being urged to institutionalize a clear pathway for innovation.

Global financial firms are moving to seize an early lead by treating digital assets as a new financial infrastructure. Goldman Sachs, Deutsche Bank and UBS have announced plans to jointly pursue the issuance of a stablecoin. Payment companies including Visa and Mastercard are also expanding efforts to connect stablecoins to existing payment and settlement networks.

Those moves matter because of the trust traditional financial institutions have built over time. Backed by capital, customer bases and the ability to respond to regulation, they are likely to capture market share faster than existing virtual-asset service providers. As the stablecoin market grows, customer access points and strengths in security and internal controls will become competitive advantages for incumbent financial companies, according to a senior financial-industry official.

South Korea is still standing still. A Digital Asset Basic Act is expected to be proposed in the National Assembly this month. Even if it is enacted, authorities would still need to draw up enforcement decrees and supervisory rules that set the standards for business. That means it could take considerable time after the law’s passage before the market and companies begin moving in earnest.

If global financial firms secure the digital-asset market first, domestic financial companies will have fewer chances to gain the upper hand. That is why South Korea needs to be ready to accelerate follow-up measures as soon as the law is enacted.

Cho Mi-hyun, Hankyung.com reporter mwise@hankyung.com