KakaoBank, the pioneering digital bank under South Korea’s tech giant Kakao, has reportedly progressed significantly in the development of its Won-pegged stablecoin project, aptly named “Kakao Coin.” This strategic move comes as the nation braces for impending advancements in critical crypto-related legislation, setting the stage for a competitive landscape among emerging stablecoins.
As per recent reports, KakaoBank has transitioned its “Kakao Coin” project from initial review stages to active development. The news, surfaced by local media outlets, suggests that the IT behemoth is channeling substantial resources toward executing its stablecoin strategy, which centers around its financial affiliate, KakaoBank. The firm has taken proactive steps by ramping up its recruitment efforts, particularly targeting blockchain service backend developers to bolster its newly formed Business Service Development Team.
Positions within this initiative emphasize crucial areas such as designing blockchain-based service architectures, key management protocols, and transaction processing system development, focusing on expertise in smart contracts, token standards, and full node operations.
This bold pivot toward creating an independent blockchain infrastructure underscores KakaoBank’s commitment to integrating innovative financial services and aligning with its broader ambition for a robust stablecoin ecosystem. In August, the Kakao Group underscored the importance of its Won-pegged token initiative by establishing a “KRW Stablecoin Joint Task Force” comprising major affiliates, including Kakao, KakaoBank, and KakaoPay.
In addition, KakaoBank has recently pursued trademark applications for several names that blend KRW with the bank’s abbreviation, KKB, submitted to the Korean Intellectual Property Office. These applications target three categories relevant to crypto-based electronic transfers and financial transactions.
However, not all news surrounding the project has been positive. Kakao’s founder, Kim Beom-su, faced judicial scrutiny over stock price manipulation allegations tied to SM Entertainment but was recently acquitted in his initial trial, potentially easing some of the concerns surrounding the initiative.
South Korea’s Competitive Landscape Amid Regulatory Challenges
As KakaoBank forges ahead, the stablecoin race in South Korea is heating up, with competitors like Naver Financial also making significant strides. Reports indicate that Naver has successfully completed the development phase of a stablecoin wallet, developed in collaboration with the Busan Digital Asset Exchange (BDAN) and venture capital firm Hashed. The wallet is expected to be fully operational next month, pending the establishment of necessary regulations.
Nonetheless, the regulatory framework for stablecoins remains uncertain. The Financial Services Commission (FSC) and the Bank of Korea (BOK) are currently embroiled in a dispute regarding the role of banks in the stablecoin sector. As it stands, the BOK has advocated for a requirement that banks maintain at least a 51% ownership stake in any stablecoin issuer seeking regulatory approval, a proposal that could hinder innovation and dampen participation from tech firms.
Industry experts widely regard the BOK’s position as risky, with concerns that such stringent regulations could stifle growth and market entry from emerging tech companies. Conversely, the FSC insists that virtual asset regulation should align with existing legal frameworks to prevent market confusion.
As stakeholders navigate these turbulent waters, the potential for further delays looms, with many hopeful that clarity will soon emerge. The interplay between regulatory decisions and innovative ambitions will undoubtedly shape the future of the stablecoin landscape in South Korea.
