South Korea's Stablecoin Shift Threatens Card Providers, Boosts Tech Giants

South Korean experts have expressed concerns that the nation’s shift towards stablecoins could negatively impact card providers, while potentially benefiting domestic tech giants. The Democratic Party lawmakers on the National Assembly’s Political Affairs Committee are planning to introduce the Digital Asset Innovation Act next month, which defines stablecoins as “value-stable digital assets” and requires issuers to have equity capital assets worth at least 1 billion won.

The Bank of Korea has shown skepticism towards stablecoins, warning of potential negative effects on the commercial banking sector. Credit card providers are also expected to face challenges, as stablecoins could weaken their payment base and make it difficult to guarantee short-term profitability. An employee from an unnamed card provider noted that while stablecoins may not replace the ability to offer spending on credit, the industry is facing a rise in loan defaults due to borrowers' decreasing ability to repay.

On the other hand, tech firms in South Korea are eager to embrace the change brought by stablecoins. Companies like Naver and Kakao, which have been working on blockchain-related innovations, are expected to benefit from the regulatory clarity. Other firms, including Hyundai HT, Hyundai Mobis, Kocom, MediaZen, Kaon Media, and Bridgetec, are also showing interest in the stablecoin space. Naver, in particular, has a vast ecosystem of web, IT, and payment services, and positive changes in stablecoin policy could accelerate its blockchain-related business. A potential cooperation or interoperability solution between Naver and Line, a chat app popular in other Asian markets, could provide an additional boost.

According to analysts, the stablecoin pivot in South Korea could lead to a structural crisis for the card industry in the long term, while tech firms are expected to prosper from the regulatory rollout. The impact on profitability for card companies remains uncertain, but the industry is already facing high default levels. Tech firms, on the other hand, are moving quickly to capitalize on the potential opportunities presented by stablecoins.