South Korea's Naver-Dunamu Merge Aims to Challenge US Stablecoin Dominance with AI-Blockchain Push

Naver Corp. and Dunamu Inc. are set to reshape South Korea's fintech and crypto landscape after confirming a landmark merger that will inject $7 billion into AI and blockchain initiatives, according to multiple local reports. The deal, valued at 10 trillion Korean won ($6.8 billion), sees Naver Financial acquire Upbit's parent company Dunamu through a share-swap arrangement, creating a fintech entity worth approximately $13.6 billion. The merged entity will focus on building a next-generation financial infrastructure that integrates Naver's AI capabilities with Dunamu's blockchain expertise, aiming to establish a "new global framework" spanning payments, settlements, and broader financial services.

The merger underscores South Korea's aggressive push to develop a domestic stablecoin ecosystem, a priority for President Lee Jae Myung to counter the dominance of U.S. dollar-backed tokens. Both companies plan to launch a Korean won-pegged stablecoin, leveraging Dunamu's regulatory experience and Naver's vast user base of 30 million monthly NaverPay users. This aligns with broader national efforts to protect monetary sovereignty, though legislative progress remains stalled. The Bank of Korea has insisted that only registered banks can issue won-stablecoins, complicating the regulatory path for non-bank players.

The investment reflects a strategic bet on the convergence of AI and blockchain technologies. Naver CEO Choi Soo-yeon emphasized the "critical juncture" between blockchain's popularization and the shift to agentic AI, framing the merger as a response to global competition. Dunamu President Song Chi-hyung highlighted the potential to disrupt traditional financial systems, with the combined entity targeting advancements in AI-powered blockchain solutions, decentralized finance applications, and cross-platform interoperability. Over five years, the firms aim to fund research infrastructure, talent development, and startup incubation, positioning South Korea as a leader in the Asian tech ecosystem.

The move also intensifies rivalry with KakaoBank, which has advanced its own won-stablecoin initiative to the development stage. Kakao's project, led by founder Kim Beom-soo, includes hiring blockchain engineers and forming a task force to coordinate stablecoin and tokenization efforts. Meanwhile, Naver's merger accelerates its integration of Upbit's liquidity and crypto infrastructure, potentially enabling instant stablecoin distribution across its platforms.

Regulatory uncertainty remains a key challenge. The Financial Services Commission has rejected proposals to grant the Bank of Korea emergency powers over stablecoin issuers, arguing that smaller players pose minimal systemic risks. This stance aligns with global trends, where major economies have yet to establish direct liquidity support for stablecoins. Despite these hurdles, industry analysts expect the Naver-Dunamu merger to set a precedent for regulated stablecoin rollouts in South Korea, provided lawmakers finalize a framework soon.

As the companies prepare to announce the merger publicly, the transaction's success will hinge on balancing innovation with regulatory compliance. The combined entity's ability to navigate South Korea's cautious monetary policy while competing with global tech giants will determine whether it can achieve its vision of reshaping the financial sector.