South Korea Pushes for KRW Stablecoin to Counter USD Dominance

Lawmakers affiliated with Lee Jae-myung, the leading candidate in the South Korean presidential elections, have urged Seoul to accelerate the development and implementation of a KRW stablecoin. This move is seen as a strategic response to the growing dominance of USD-pegged stablecoins like USDT and USDC in the global market. Min Byoung-dug, a lawmaker from the Democratic Party and the chairman of the party’s Digital Asset Committee, emphasized the potential of stablecoins to become a significant industry, comparable to AI or semiconductors. He warned that failing to act promptly could allow Washington to dominate the stablecoin and future payment markets.

Min highlighted the importance of South Korea's strong internet infrastructure and its potential to lead in the institutionalization of stablecoins. He stated that the country should not miss the opportunity to establish a strong position in the global stablecoin market before USD-based stablecoins become firmly entrenched. Min also noted the limitless potential for stablecoin adoption in the payments space, urging South Korea to take proactive measures to capitalize on this emerging industry.

Lee Jae-myung, the frontrunner in the presidential race, has repeatedly promised to launch a state-backed KRW stablecoin. He has called for Seoul to enter the stablecoin market quickly, warning that delays could lead to further capital flight from the country. Min echoed Lee's calls, emphasizing the need for Seoul to expedite the institutionalization of stablecoins to avoid falling behind the rapid adoption of stablecoins, particularly in the United States. Min noted that USDT and USDC account for a significant portion of the stablecoin market in the United States and are already being used in some parts of South Korea, such as Dongdaemun Market.

Min's comments about Dongdaemun Market, while contentious, underscore the growing use of stablecoins in various sectors. He warned that if USDT and USDC continue to gain popularity worldwide, the space for a won-based stablecoin could diminish. Min suggested that a won-based stablecoin could gain global attention and drive up demand for won-related assets, such as government bonds underpinning a KRW stablecoin. He also proposed that fans of South Korean webtoons could be among the first overseas users of a won-based stablecoin.

Min is actively pushing for the National Assembly to approve stablecoin legislation. With the Democratic Party holding a large majority in the house and the nation in a state of political transition following the impeachment of Yoon Suk-yeol, there is a possibility that the party may decide to push ahead with such a bill before the June 3 elections. Min has already unveiled a private member’s bill named the Basic Act on Digital Assets, prepared with the aid of industry experts. He plans to submit the bill to the National Assembly after another review.