Kakao Bank "Stablecoin, a Technology That Will Bring Financial Innovation"

Song Ho-geun, Vice President of Kakao Bank, said, "Stablecoin is a technology that will bring innovation to finance," and emphasized that legislation and ecosystem development should be expedited.

Song said at the forum "Won-denominated Stablecoin, Opening the Future of Financial Innovation," held on the 8th at the Financial Investment Association in Yeouido, Seoul, that "since the domestic user base for virtual assets (cryptocurrencies) is broad, won stablecoin (wonsco) will also spread quickly."

He explained, "The current domestic virtual asset market has large demand to handle trading, overseas remittances, and holding dollar-denominated assets with USDT and USDC," adding, "If wonsco emerges, it can sufficiently replace that area." He went on, "To support this, wonsco listings should be supported not only on major domestic exchanges but also on overseas exchanges," and pointed out, "In particular, since the domestic market lacks a market-making and liquidity provision (LP) industry, it is necessary to foster an LP ecosystem that can maintain the peg (1:1 value linkage). If the peg breaks, it is difficult to restore trust."

Regarding overseas remittances, he emphasized the effect of procedural simplification. Song said, "The existing method that goes through SWIFT and correspondent banks involves high costs and time burdens, and refunds are delayed when problems occur," adding, "The structure can be simplified by exchanging wonsco for dollars and transferring between wallets. However, it is necessary to clearly define regulations such as the timing of customer identification (KYC)·anti-money laundering (AML) checks and reporting for foreign exchange transactions."

He predicted that merchant payments are realistically at a 'bridge stage.' He said, "It is difficult to replace the existing payment network all at once," adding, "Initially, by connecting stablecoins in the form of a gateway, fees can be reduced to less than half and settlement cycles shortened. Over time, the intermediate step will be reduced and the structure will evolve toward near-instant payment."

He also suggested applicability to local currencies and purpose-specific payments. Song said, "Instead of the current system, which is slow due to individual issuance and execution by local governments, rapid execution is possible with purpose-specific stablecoins," explaining, "For example, tailored vouchers for disaster- and drought-stricken areas can be distributed immediately." He also said, "Like the income tax deduction for credit card use, expansion of local currencies can be promoted through initial incentive designs for users and merchants."

He added, "Just as artificial intelligence (AI) is changing everyday life, stablecoins will change the financial infrastructure itself," and added, "Korea is late, but now is the starting line. If a system that balances innovation and stability is prepared quickly, we can leap forward as a 'sovereign (national sovereignty-type) stablecoin.'"