According to Cointelegraph, Layer-1 blockchain Kaia has announced plans to introduce a stablecoin pegged to the South Korean won following the inauguration of President Lee Jae-myung on June 4. Lee, a left-leaning politician, distinguished himself during his campaign with a series of promises favorable to the cryptocurrency sector. The launch of a won-based stablecoin is among the crypto initiatives that set Lee apart from other candidates who also supported digital currencies. However, the issuance of stablecoins in South Korea faces legal challenges, as the country's constitution grants exclusive rights over currency issuance to the central bank, the Bank of Korea.
Kaia is targeting the domestic market for its won-based stablecoin amid a regulatory environment that is becoming more favorable. The Democratic Party, led by Lee, is inclined towards fostering private-sector innovation. Min Byoung-dug, a lawmaker heading the party's Digital Asset Committee, has expressed support for stablecoins issued by private entities and is preparing to propose the Digital Asset Basic Act. This comprehensive legislative framework aims to regulate the crypto industry effectively. Kaia's interest in stablecoins is significant, given its backing by Kakao, a major tech conglomerate in South Korea that provides essential digital services such as messaging, navigation, and finance.
The new administration has sparked enthusiasm among both traditional and crypto investors in South Korea. A survey conducted by the Korea Chamber of Commerce and Industry, cited by various local media outlets, revealed that nearly 60% of respondents plan to increase their crypto holdings during President Lee's tenure. This optimism was reflected in the stock market on June 9, with payment firms Kakao Pay and Danal both closing the day with a 29.9% increase. Kakao Pay is considered a potential beneficiary of a domestic stablecoin due to its digital wallet infrastructure and QR code payment system. The company is the fintech arm of Kakao Corp, whose Web3 subsidiary developed the Klaytn blockchain, now merged with Japanese messenger LINE-backed Finschia to form Kaia.
The stock rally also indicates growing confidence that stablecoin regulation will progress swiftly. Kim Yong-beom, a former vice finance minister and recently head of research at blockchain venture capitalist Hashed, has been appointed as President Lee's chief policy officer. Lawmaker Min's upcoming Digital Asset Basic Act is anticipated to include provisions for legalizing and regulating won-pegged stablecoins, suggesting that legislative support is consolidating behind the initiative.
President Lee's administration faces uncertainty due to multiple ongoing criminal trials that began before his election. The most politically sensitive case, a remand trial for alleged election law violations during his 2022 campaign, was initially set to resume on June 18. South Korea's Constitution grants presidents immunity from criminal prosecution except in cases of insurrection or treason, but it was unclear if this would apply to trials already underway before inauguration. On June 9, the Seoul High Court ruled that Article 84 of the Constitution does apply, indefinitely postponing the trial. This decision effectively clears the political path for Lee's administration to advance its crypto agenda. Four other trials remain pending, with delays or suspensions likely depending on each court's interpretation.
