What happened?
The world's two major stablecoin issuers, Tether and Circle, are actively seeking opportunities to enter the South Korean financial system through meetings with senior executives from the 'four major financial groups' in Korea. The main topics of discussion are issuing a Korean won stablecoin, distributing USD stablecoins, and establishing strategic partnerships.
The backdrop of these high-level meetings is that the South Korean government is preparing to establish a clear regulatory framework for Korean won stablecoins. At the same time, the Bank of Korea has suspended testing for CBDC (central bank digital currency) and shifted its support towards stablecoins issued by the private sector, creating favorable conditions for international companies to enter the market.
Although international giants are visiting, domestic companies in South Korea like Kakao have also begun preparations to issue Korean won stablecoins. Therefore, collaborating with local banks is seen as a key strategy for Tether and Circle to respond to local competition and maintain their dominance in a historically closed market.
Tether and Circle meet secretly with South Korean banking giants
According to local media reports, representatives from the world's two major stablecoin issuers, Tether (USDT issuer) and Circle (USDC issuer), are expected to meet with senior executives from South Korea's four major financial groups this week.
This meeting is seen by the outside world as a key step for the two major stablecoin giants to officially enter the South Korean market. Both parties will discuss several topics, including the possibility of issuing a Korean won stablecoin, distributing USD stablecoins in South Korea, and establishing potential partnerships.
According to reports from (Yonhap News Agency), specific meeting schedules have been partially revealed. Jin Ok-dong, CEO of Shinhan Financial Group, and Ham Young-joo, CEO of Hana Financial Group, are expected to meet with Circle President Heath Tarbert this Friday. Additionally, Ham Young-joo has also arranged to meet with a senior Tether official on the same day.
Additionally, the other two institutions designated by the South Korean Financial Services Commission as 'domestic systemically important banks'—Lee Chang-kwon, Chief Digital and Information Technology Officer of KB Financial Group, and Jeong Jin-wan, President of Woori Bank—also plan to meet with Tarbert in the future, although specific times have not yet been disclosed.
The maturity of South Korea's regulatory environment is a key backdrop.
The backdrop of this high-level meeting comes as South Korea is actively establishing a clear regulatory framework for stablecoins.
The South Korean financial regulatory agency, the Financial Services Commission (FSC), is expected to introduce a bill specifically targeting Korean won stablecoins as part of the second phase of the country's Virtual Asset User Protection Act.
It is noteworthy that the South Korean government's position has shifted from previously testing central bank digital currency (CBDC) to supporting stablecoins issued by private enterprises that are pegged to the Korean won.
This shift has greatly energized the market. At the beginning of July this year, at least three major South Korean banks saw their stock prices surge due to submitting trademark applications related to stablecoins. The internet giant Kakao's bank also publicly stated its plans to actively participate in the stablecoin market.
Market dynamics and challenges
Despite the optimistic market outlook, there are still political differences regarding the regulatory details for stablecoins in South Korea. The ruling party and the opposition have different views on whether to ban interest-bearing stablecoins and how strict capital restrictions should be.
Rajiv Sawhney, head of international portfolio management at Wave Digital Assets International, pointed out that this is an 'interesting development' because the South Korean market has historically been more closed off to foreign institutions, and exchange businesses have mainly focused on spot trading rather than derivatives.
He believes that considering strong local companies like Kakao are preparing to launch their own Korean won stablecoin, establishing joint ventures or partnerships with major banks in South Korea will be a key strategy for Circle or Tether to maintain their market share in the global stablecoin market.
Part of the global layout of stablecoin giants
For Tether and Circle, engaging with South Korean banks is part of their global regulatory communication and market expansion strategy.
In March of this year, executives from both companies attended a forum hosted by the U.S. Commodity Futures Trading Commission (CFTC) in Washington, D.C. Tether continues to communicate with U.S. lawmakers to help shape stablecoin policies and has signed agreements with governments of countries like Guinea and Uzbekistan to explore blockchain technology applications.
Circle is also actively collaborating with governments and regulatory bodies worldwide to help establish regulatory frameworks for stablecoins. For example, it participates in policy discussions in the United States and has obtained an electronic money institution license in Europe that complies with local regulations (MiCA).
At the same time, Circle has established strategic partnerships with numerous international financial, payment, and technology giants, such as collaborating with cryptocurrency exchange Binance to promote the adoption of USDC and exploring integration with traditional financial systems like Ant International.
This meeting could not only open the door for Tether and Circle to enter South Korea's vast financial market but also signifies that South Korea's role in the global stablecoin ecosystem will become increasingly important. As the regulatory framework becomes clearer, the collaboration between international giants and local banks will inevitably reshape the digital financial landscape of South Korea, or even Asia.
Reference: cointelegraph, decrypt
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