Stablecoins Are Just the Beginning… Everything Will Be Tokenized [Korea Economic Daily Koala]

The Biden administration cracked down on crypto. The long-suppressed crypto industry strongly supported Trump. The United States has a lot of debt and needs a lot of money. Newly inaugurated President Trump and the crypto industry found their answer in stablecoins.

For seven months after the government was launched, all three branches of the U.S. government—executive, judicial, and legislative—have supported crypto. The White House set direction with executive orders and instructed regulatory agencies to rapidly and forcefully reform regulations. The courts wrapped up major crypto-related lawsuits that had been pending for a long time, and Congress quickly passed the GENIUS Act and the Clarity Act, providing legal clarity to the crypto industry. Numerous major U.S. banks announced plans to issue their own stablecoins.

At the end of July, the United States announced its next plan: 'on-chaining' of financial markets. The U.S. government, the crypto industry, and financial institutions are trying to begin a revolution in finance by enabling the trading of all financial products on the blockchain.

On January 23, two days after Trump’s inauguration, the White House issued an executive order titled 'Strengthening American Leadership in Digital Financial Technology,' instructing: △ promoting U.S. leadership in digital assets, △ establishing a digital asset market working group and a national digital asset reserve, △ prohibiting central bank digital currency (CBDC), △ supporting U.S. dollar stablecoins, and △ repealing Biden-era policies.

On July 17, the White House published a 166-page report under the same title, emphasizing: △ that digital assets and blockchain technology are key to financial innovation, economic growth, and global leadership for the U.S.; △ that clear, technology-neutral policies should be pursued instead of existing regulations that hinder technological progress; and △ that all financial institutions and citizens should be guaranteed equal access to banking services, thereby ending the “de-banking” shadow regulations. The report also specified △ structural improvements to address overreaching enforcement actions taken by the Securities and Exchange Commission (SEC) during the Biden administration.

The SEC, which had blocked crypto industry growth under the Biden administration, also began aggressive reforms from the first day of the Trump administration. On July 31, Commissioner Paul Atkins delivered a speech at the American First Policy Institute, citing the White House's July 17 report and stating:

"Today, I am announcing the launch of 'Project Crypto.' This is a commission-level initiative to modernize securities rules and regulations so that U.S. financial markets can move on-chain."

In his speech, Commissioner Atkins also promised △ to allow onshore trading of tokenized financial assets in the U.S., △ to permit a 'super app' model providing securities, non-securities, and traditional financial services in one place, △ to establish reasonable rules for decentralized finance (DeFi) models such as automated market makers (AMM), and △ to foster on-chain securities markets through system improvements.

The next day, on August 1, the Commodity Futures Trading Commission (CFTC) announced the launch of 'Crypto Sprint' to implement recommendations from the White House report, and on the 21st, it began the public comment process for this initiative. The CFTC announced, "The administration's top priority is to enable the immediate trading of digital assets," and stated, "In cooperation with the SEC’s Project Crypto, we will respond to President Trump’s call for American leadership. The comment process will allow the CFTC to carefully examine issues related to leveraged, margin, or credit-fueled retail transactions as we implement presidential guidance."

To summarize: The White House has made its support and direction for crypto industry growth and advancement clear through executive orders and reports. Congress has provided legal clarity for stablecoin businesses with the GENIUS Act and clarified oversight between the SEC and CFTC with the Clarity Act; the two regulators are driving powerful regulatory reforms and industry cultivation through 'Project Crypto' and 'Crypto Sprint.' And, as Commissioner Atkins explicitly stated, their target is the on-chaining of the financial markets. Just as Bitcoin and Ethereum are traded on the blockchain, the government aims to foster the trading of all financial assets—stocks, bonds, funds, forex, commodities, derivatives, and more—on the blockchain.

This is in line with what BlackRock Chairman Larry Fink said in his annual letter to shareholders in March: “Every stock, every bond, every fund—every asset—can be tokenized,” and predicted “tokenized funds will establish themselves as a popular investment vehicle, like ETFs.” It is also significant that Coinbase, the largest U.S. digital asset exchange, now brands itself as the 'Everything Exchange.' Robinhood is already supporting trading of tokenized popular stocks such as Tesla on its platform.

With this evolution of financial markets to on-chain, assets will be tokenized and become digital assets, and trades will be conducted via stablecoins. This aligns with the U.S. administration’s strategic direction, as the on-chaining of financial markets led by the U.S. will increase demand for dollar stablecoins. Through the expansion of demand for dollar stablecoins, the U.S. government can boost demand for Treasurys and strengthen the dollar’s dominance.

Countries that have so far been passive about stablecoin issuance and approval are now responding quickly. On the 17th, it was reported that the Japan Financial Services Agency would approve JPYC’s issuance of yen stablecoins this fall. In China, which has strictly cracked down on virtual assets and pushed its central bank digital currency (CBDC), reports on the 22nd stated that yuan stablecoins are beginning to circulate in Hong Kong and Shanghai. This is seen as a response to U.S. moves to go beyond merely supporting dollar stablecoins and to try to take the lead in on-chain financial markets.

Now, we must ask ourselves: can we stay uninvolved in this change? If the United States, China, and Japan issue their own stablecoins, and America moves the financial and FX markets on-chain, can we ignore or resist that change?

Ever since discussions began about issuing a won stablecoin, I have repeatedly argued, “The Korean won must exist on the blockchain.” Just as Korea must be marked on the world map, just as Hangul must be visible on the Internet, the won must have a presence in the on-chain market. The extinction of the won from financial markets when they move on-chain must never happen. This is why the existence of a won stablecoin is crucial for currency sovereignty.

Even with this immense change officially announced, we are still wasting time talking about the risk of money laundering with won stablecoins, difficulties in capital controls, or decreased bank profitability. These criticisms make sense within the rules of the existing financial order we have maintained thus far. However, the market structure itself is changing, driven by the White House. Strict adherence to old principles risks making us obsolete in the new era.

At the end of the Joseon Dynasty, conservatives claimed that Western discoveries threatened Confucian values and the nation’s very existence. The Confucian scholars, having grown up in Joseon and studied its philosophy, naturally thought and acted that way. Yet we know well, a century later, how the time wasted by those conservatives affected the fate of Joseon.

Minseung Kim is a research fellow at the Korbit Research Center...

He is a founding member and research fellow at the Korbit Research Center. He breaks down complex events and ideas from the blockchain and virtual asset ecosystem in a simple way and helps people with different perspectives understand each other. He has experience in blockchain project strategic planning and software development.

▶ This column is by an external contributor, introduced to provide multiple perspectives to cryptocurrency investment newsletter readers. It does not represent the views of The Korea Economic Daily.