Kakao's internet group registered the trademarks 'KRWGlobal' and 'KaKRW', targeting 49 million users.
Kakao, South Korea's leading internet conglomerate, is moving towards launching a won-pegged stablecoin via the Kaia blockchain – a public platform formed from the merger of Klaytn and Finschia. This move comes as the Korean National Assembly is considering new legislation on stablecoin regulation, creating a race against time between technological innovation and the legal framework.
Recently, Kaia has registered strategic trademarks with the Korean Intellectual Property Office, including 'KRWGlobal', 'KRWGL', 'KRWKaia', and 'KaKRW'. These brand names indicate ambitions to develop a comprehensive stablecoin ecosystem, not only serving the domestic market but also aiming for cross-border applications.
With the participation of Kakao and its affiliate Kakao Pay on Kaia's board, the project is positioned as a potential bridge to stablecoins backed by other fiat currencies like USD and JPY. Sangmin Seo, Chairman of the Kaia DLT Foundation, emphasized that users within the Kakao ecosystem – currently serving over 49 million active users monthly – could theoretically 'access DeFi protocols right within the widely used mobile app.'
The legal framework is still taking shape
However, the future of the KRW stablecoin largely depends on the completion of the legal framework. Currently, South Korea has several competing proposals regarding stablecoin regulation. In June 2024, the government announced the Basic Law on Digital Assets, allowing qualified companies to issue won-pegged tokens if they meet minimum capital requirements.
The Bank of Korea proposes to start with bank-issued stablecoins and is researching deposit tokens on public chains. By the end of July 2024, both the ruling party and the opposition will present two separate stablecoin bills, differing on whether to allow interest on stablecoin deposits, but agreeing on a 100% reserve requirement and granting emergency intervention powers to the regulator.
Min Jung, a senior analyst at the quantitative trading firm Presto, points out that a major obstacle for the KRW stablecoin is the 'lack of clear and convincing use cases compared to USD stablecoins.' South Korea's strict capital control system under the Foreign Exchange Transactions Act imposes specific procedural requirements for capital transactions and restricts overseas use, creating challenges for reducing cross-border transaction friction – which is seen as the core value of stablecoins.
The government is expected to require companies in this sector to register and submit monthly reports to the central bank starting in the second half of 2025. Seo emphasized that the KRW stablecoin is not merely about issuing digital currency but also about legalizing business activities based on digital assets in the Korean market.
With a near-universal coverage network – over 95% of the population uses it for messaging, payments, and online banking – Kakao has a significant advantage in deploying stablecoins. However, any launch plans still depend on final regulations regarding licensing, reserve requirements, interest payment mechanisms, and the role of banks in issuance.
