Viewpoint: South Korea's stablecoin business may be reorganized around a "banking consortium" model

Jinse Finance reported that, according to local information from the Bank of Korea (the central bank of Korea) in Hong Kong, the number of stablecoin issuer license applications received by the Hong Kong Monetary Authority (HKMA) since August this year has been lower than expected. The HKMA stated that as of the end of September, only 36 institutions had applied. This number is less than half of the 77 institutions that initially expressed interest. The Bank of Korea is also closely monitoring the case in Hong Kong. Even in Hong Kong, where capital flow controls are relaxed and there is no financial-industrial separation principle (“financial-industrial separation principle”), stablecoins still need to be managed under a strict regulatory framework. This situation will provide more substantial grounds for the Bank of Korea’s policy decisions. In response, some predict that the domestic stablecoin business in Korea is also highly likely to be reorganized with a “banking alliance at its core.” On the 20th, at the National Assembly’s state audit meeting, the Financial Services Commission of Korea and the Bank of Korea jointly stated that the issuer of the Korean won stablecoin should be an alliance centered on the banking industry. In response to the question from Democratic Party member Ryu Dong-soo, “Is it more appropriate to adopt an alliance form with bank participation when balancing innovation and stability?” Vice Chairman of the Financial Services Commission Kwon Dae-young replied, “I agree with this view.” The Bank of Korea also emphasized in its business report that it “supports this in principle” and pointed out that “it is necessary to issue (stablecoins) through a bank-centered alliance.”