Kakao Group to Add Stablecoin Functions to KakaoPay Wallet Used by 43 Million

Kakao Group said on September 9 that it has developed technology allowing users to store and trade on-chain assets such as stablecoins through the KakaoPay wallet. The group aims to use the payment and banking infrastructure of KakaoPay and KakaoBank to gain an early lead in the market for distribution of won-denominated stablecoins.

KakaoPay said the same day that it had completed a proof of concept for an integrated digital-asset wallet. The project centers on expanding the existing KakaoPay Money wallet so it can also handle digital assets, including stablecoins.

The KakaoPay wallet is used by about 43 million registered users to store prepaid balances and make payments. The company tested transfers, payments and settlement of digital assets by adding blockchain functions to an existing wallet environment already used by a large customer base. It also built the related interfaces and user procedures to make it easier for users to manage on-chain assets.

KakaoBank is also working to link the wallet with its banking system. Based on the security standards and regulatory requirements that apply to banks, it is reviewing system stability and ease of use. The group plans to verify the technology separately in a payment platform and an internet bank, then build distribution infrastructure covering digital-asset custody, payment and settlement.

Kakao Group plans to supply the validated wallet technology to outside companies and financial firms as well. It will offer an integrated solution combining technical support and consulting so client institutions can design and operate wallets suited to their business structures and regulatory requirements.

The solution will also include design and operating measures to respond to regulatory changes, given that laws and rules related to stablecoins have yet to be finalized. Kakao Group said it is discussing partnership options with South Korean companies and financial institutions considering the adoption of won-denominated stablecoins and digital assets.

Kakao Group is prioritizing distribution over stablecoin issuance, focusing first on securing merchants and users. It believes that combining KakaoPay's payment network with KakaoBank's financial infrastructure would allow it to quickly offer custody, remittance and payment services once won-denominated stablecoins are institutionalized.

Shin Won-keun, chief executive officer of KakaoPay and head of Kakao Group's joint stablecoin task force, said the value of digital assets emerges in actual circulation rather than in issuance itself. Based on its wallet technology and experience responding to regulation, the group aims to build a domestic digital-asset ecosystem with a range of partners.