Can KakaoPay Issue a Korean Won Stablecoin?

Stock price surge fueled by fintech direct issuance expectations

Many restrictions on issuance and circulation under current law

Institutional barriers such as business scope restriction and corporate accounts

As expectations rise for the issuance of a Korean won stablecoin, KakaoPay has emerged as a major beneficiary. Following the inauguration of the Lee Jae-myung administration, related discussions have accelerated, and on the 10th, Min Byung-deok, a member of the Democratic Party of Korea, further boosted market expectations by introducing the 'Digital Asset Basic Act', which contains provisions for stablecoin issuance.

Stablecoins can generate synergy with simple payment services like KakaoPay because they enable real-time settlements on the blockchain, reducing payment delays and fee burdens. In particular, a platform with tens of millions of users like KakaoPay can form an internal payment ecosystem using its self-issued stablecoin.

These expectations were reflected in the stock price as well. KakaoPay's stock price soared by over 50% within just five days, reaching 63,900₩. This is driven by the anticipation that, if the bill passes, fintech companies such as KakaoPay could directly issue and distribute Korean won stablecoins.

"KakaoPay Faces Legal Hurdles in Issuing Stablecoins Under Current Law"

However, there is considerable skepticism about whether KakaoPay can legally issue and distribute stablecoins directly. The prevailing view in legal circles is that structural constraints are clearly present in current law.

The Digital Asset Basic Act defines Korean won stablecoins as 'asset-linked digital assets' and requires approval from the Financial Services Commission to issue them. The process also demands meeting certain standards, such as capital requirements, specialized personnel and facilities, and financial soundness. The biggest issue here is the business scope restriction for electronic financial service providers.

As KakaoPay is registered as an electronic financial service provider under the Electronic Financial Transactions Act, Article 35 of the Act imposes restrictions on engaging in businesses other than its main business. It is also unclear whether the issuance of asset-linked digital assets falls within the permitted operations of electronic financial service providers. Therefore, without a separate approval process or organizational restructuring, it is difficult for companies like KakaoPay to issue stablecoins, according to legal experts.

Jin Hyun-soo, representative attorney of Descent Law Office, stated, "There are institutional constraints on KakaoPay directly issuing stablecoins," and added, "For electronic financial service providers, since their business scope is restricted, issuing asset-linked digital assets separately from their main business requires prior consultation with the financial authorities and organizational restructuring." He further emphasized, "It will be difficult for fintech companies to realize issuance in the short term, and mid- to long-term coordination will be needed according to regulatory changes."

Kim Hyo-bong, an attorney at Bae, Kim & Lee LLC, also said at the 'Fin:Frame 2025' seminar held on the 10th, "Current virtual asset user protection law contains a comprehensive prohibition that bans the trading of virtual assets issued by oneself or related parties, making it difficult for fintech companies to handle both issuance and distribution simultaneously."

Attorney Kim further noted, "The current Electronic Financial Transactions Act does not premise payments and settlements on blockchain technology," and stressed, "Going forward, separate payment business license systems, such as virtual asset payment business and wallet service business, need to be introduced through the Digital Asset Basic Act." He added, "If this provision is limited only to trading within virtual asset exchanges, there could be room for new interpretations."

PayPal Segregated Issuance and Circulation…In Korea, 'Corporate Account Barrier'

Overseas, there are cases where fintech companies do not issue stablecoins directly but only handle distribution. A prime example is the U.S.-based PayPal. PayPal distributes its own stablecoin 'PYUSD' to the market, but the issuer is Paxos, a blockchain infrastructure company approved by the New York State Department of Financial Services (NYDFS). By separating issuance from distribution, regulatory burden is reduced and fintech companies are able to focus on their core payment functions.

However, in the case of KakaoPay, this is said to be structurally difficult as well. To distribute stablecoins, a virtual asset wallet or account under the company's name is required, but there are strict limitations on corporate virtual asset account opening in Korea. Currently, only some non-profit corporations, exchanges, and government institutions are conditionally allowed to open accounts for the 'liquidation (sale)' of held coins.

The financial authorities announced in the 'Virtual Asset Institutionalization Roadmap' released in February that they would gradually allow corporate market participation in three stages. In the first stage, only organizations such as prosecutors' offices or non-profit groups are allowed to open accounts in a limited way, and by the second stage, expected after the second half of 2025, listing corporations and professional investment firms would be tentatively permitted to trade for investment purposes.

According to a legal expert, "It is not completely impossible, from a legal perspective, for simple payment firms to receive stablecoins and convert them into prepaid means. However, whether the financial authorities will clearly permit this is uncertain. Even if the authorities do allow it, it is currently difficult to create a corporate account to receive stablecoins for business purposes."

He added, "Structures where virtual assets are received or distributed as part of business activities have not yet been subject to institutionalization discussions," and "Depending on future legislation and how the financial authorities interpret the situation, the trajectory of the stablecoin industry could change significantly."