To Avoid Losing Leadership... 8 Banks to Establish Won-Based Coin Joint Venture
Summary
- Eight domestic banks have reportedly been reviewing the establishment of a joint venture to issue a won-based stablecoin.
- The eight banks stated they plan to invest within the scope allowed by the Banking Act, and are considering a business model in which preparatory assets would be deposited and entrusted at the banks.
- Debate continues between banks and non-banks over the right to issue won-based stablecoins; the Bank of Korea expressed that issuance should first be focused on banks.
Reviewing Coin Issuance through Consortium
Debate over Allowing Non-banks to Issue Coins
Eight domestic banks have decided to establish a joint venture to jointly issue a won-based stablecoin. As overseas-issued, dollar-based stablecoins are gradually encroaching upon banks’ unique payment and settlement functions, banks have decided to join forces to avoid losing leadership in the market.
According to the financial sector on the 24th, the Korea Federation of Banks distributed to its member banks on the 23rd a report regarding the banking sector’s response to stablecoins containing these details. According to this report, eight banks—KB Kookmin Bank, Shinhan Bank, Woori Bank, NH Nonghyup Bank, Industrial Bank of Korea (IBK), Sh Suhyup Bank, iM Bank, and K Bank—are forming a stablecoin consortium and engaging in discussions. The Korea Federation of Banks explained that they are ultimately reviewing the joint establishment of a joint venture related to stablecoins.
The eight banks plan to invest within the limits permitted by the Banking Act, under which banks can own up to 15% of the voting shares of non-financial companies. The planned joint venture will issue stablecoins collectively, and for this, the preparatory assets will be deposited and entrusted at the banks under the proposed business model.
There is heated debate within the financial sector regarding how far to allow the authority to issue won-based stablecoins. The ruling Democratic Party of Korea is pushing a bill to permit non-bank companies with paid-in capital of ₩500 million or ₩1 billion or more to also issue stablecoins.
On the other hand, the Bank of Korea maintains that as stablecoins could become a substitute for money, only banks that can be supervised should be granted issuance authority. Yoo Sang-dae, Deputy Governor of the Bank of Korea, stated, "It is desirable to first allow stablecoin issuance focused on banks and then gradually expand to non-banks."
Reporter Jeong Ui-jin justjin@hankyung.com
Korea Economic Daily
hankyung@bloomingbit.ioThe Korea Economic Daily Global is a digital media where latest news on Korean companies, industries, and financial markets.
