South Korea's Stablecoin Revolution: A Game-Changer for Banks, Card Companies, and Stock Markets
Growth of Stablecoins, Traditional Payment Cards Decline: Experts Foresee Advantage for Big Tech in South Korea
South Korea's lawmakers are in a hurry to establish rules for stablecoins, and the Digital Asset Innovation Act is set to reshape the way people pay for goods and services. Here's how the burgeoning stablecoin market could impact banks, card companies, and stock markets in South Korea.
High Capital Barriers for Issuers
Any stablecoin issuer must hold at least ₩1 billion (around USD 720 258) in equity capital, a rule that will keep small startups from participating. Only deep-pocketed firms and big players will qualify for issuing stablecoins.
Pressure on Card Providers
Card companies could feel the squeeze as stablecoins may weaken credit cards' payment base, threatening their long-term health. With an already high loan default rate of 1.93% in Q1, some of the biggest card firms have already surpassed the 2% danger mark, which may spell trouble if transactions start shifting to tokens.
Banks' Concerns Grow
The Bank of Korea isn't sold on stablecoins, citing concerns about their impact on the banking sector. If people start using stablecoins for everyday spending, banks could lose fees and deposits, undercutting commercial banking profits. Banks may have to rethink their strategies or build their own digital services to keep customers.
Tech Giants Step In
While banks and card issuers worry, tech giants like Naver and Kakao see an opportunity to leverage their apps and services by plugging in a won-backed token. Other companies, such as Hyundai HT, Hyundai Mobis, Kocom, MediaZen, Kaon Media, and Bridgetec, are keeping a close eye on the development. Analysts suggest that a Naver stablecoin, linked with web3 services or even the Line chat app in Japan, could open new markets.
Wall Street's Best Won't Stand a Chance
Investors are already feeling the impact before the vote. Shares of companies linked to stablecoins have surged, showing growing enthusiasm. However, the danger lies in the legislation's potential obstacles or alterations, which might cause prices to reverse direction if the bill becomes stalled.
Despite the challenges, South Korea's progressive legislation symbolizes a significant step towards regulated digital assets, setting a precedent for other nations. Stablecoins could transform banks into key players, challenge card companies, and provide new opportunities for stock markets as they navigate this new digital asset landscape.
Banks, facing potential losses of fees and deposits, may need to reconsider their strategies or develop their own digital services to compete with the emerging stablecoin market.
Tech giants like Naver and Kakao, with their extensive apps and services, are poised to leverage this opportunity by introducing a won-backed token, posing a threat to the market dominance of traditional financial institutions.
