South Korean Budget Office Says Won Stablecoins Could Save Merchants $3.8 Billion Annually
Won stablecoins could cut billions in merchant fees
South Korea’s National Assembly Budget Office reported that won-denominated stablecoins could save local merchants as much as $3.8 billion (5.15 trillion won) in annual payment fees. Stablecoins are digital tokens designed to track the value of assets such as national currencies.
The projected savings depend on how much traditional credit card spending moves to stablecoin payment systems. The office estimated that annual savings for businesses could range from 370 billion won ($275 million) to the high end of 5.15 trillion won, depending on adoption rates and the fees charged by these new systems.
Key findings from the budget office report
- Won-backed coins could provide a domestic alternative to a market currently dominated by dollar-linked tokens.
- Dollar-linked stablecoins accounted for 98.8% of the $312.3 billion global stablecoin market in July.
- Adoption could reduce the role of traditional banks as intermediaries for credit.
- A surge in redemptions could force issuers to sell reserve assets quickly, potentially breaking the token's price peg.
Analysis from the National Assembly Budget Office
The budget office noted that while dollar stablecoins are widely used globally, a won-denominated version would serve the local economy more directly. However, the report warned that money moving out of traditional bank deposits into stablecoins could weaken the banking system's ability to provide credit. The office recommended creating reserve requirements and limits on stablecoin rewards to protect financial stability.
Disagreements over token issuance and regulation
Government agencies in South Korea remain divided on who should be allowed to issue these tokens. The Bank of Korea prefers that issuers be controlled by banks with at least 51% ownership. In contrast, the Financial Services Commission (FSC) argues that such strict rules could stop innovation in the sector.
The report also found that links between dollar stablecoins and other South Korean markets—such as stocks and interest rates—are currently limited. However, these connections could strengthen during times of geopolitical stress or when the U.S. dollar is particularly strong.
Confirmed facts regarding South Korean crypto rules
South Korea has already taken steps to regulate the industry. The country's first major law to protect crypto investors took effect in July 2024. This law focuses on securing customer assets and preventing unfair trading practices.
Why this matters for the local economy
Wider use of stablecoins could impact the value of the local currency. A study by the Bank of Korea found that direct trading between local currencies and dollar-backed stablecoins on major platforms like Binance can put downward pressure on the value of local currencies. Establishing a won-backed alternative might change this dynamic while providing significant cost relief for merchants.
Timeline for future tokenized securities
The FSC has announced plans to expand the use of tokenized securities starting in February 2027. Tokenized securities are digital versions of traditional investments like stocks or bonds managed on a blockchain. A later stage of this plan involves linking these blockchain-based markets to stablecoin payment systems.
