It is time for a policy decision on a won-based stablecoin. If we are not to fall behind the global trend, it is important to prepare policy quickly. If we miss this timing, Korean financial institutions could be at a disadvantage in global competition.
Kim Gyu-jin, head of Tiger Research, assessed the current state of Korea's virtual asset industry this way. Kim said, Stablecoins will become the central axis of financial infrastructure, and added, Korea's opportunity lies in the trifecta of an active virtual asset market, prepared institutions, and evolving regulation.
Founded in 2022, Tiger Research is a global Blockchain research and advisory firm representing the Asian market. It publishes reports in the languages of six Asian countries, including Korea, Japan, China, Vietnam, and Indonesia, and has more than 100,000 subscribers in 150 countries worldwide.
It provides subscription-based research and advisory services to more than 20,000 institutions, including Samsung, Sony, McKinsey, and JPMorgan. Kim emphasized as differentiators from other research firms that it complies with regulation and is an independent research outfit with no conflicts of interest with venture capital (Venture Capital).
After graduating from Ajou University's business administration department, Kim worked at Yahoo Korea and Microsoft Korea, served as a director at Amazon Web Services Korea, an executive director at Amazon Web Services Japan, and a director at Hub Investment Management. Kim also concurrently serves as an industry-academia cooperation professor at Hanyang University's College of Software. The following is a Q&A with Kim.
─Is Blockchain an irreversible trend?
The reason it is an irreversible trend is that the entities adopting Blockchain technology are not individual investors but countries and global financial institutions. Blockchain has set its course as an innovation in financial infrastructure. Centered on stablecoin issuers such as Tether and Circle, a financial system is being built that runs 24 hours a day, enables borderless payments, and preserves transparent transaction records. As an investment asset, virtual assets account for 3% to 5% of the portfolios of some wealthy investors. Virtual assets are no longer assets you hesitate to invest in. They are shifting into assets where the question is how to manage them.
─Why did financial institutions choose Blockchain?
There is the advantage of cutting costs. Currently, international remittances go through multiple correspondent banks, incurring high fees and taking a lot of time. Blockchain-based payments drastically reduce this process. Second is a new source of revenue. From the perspective of financial institutions, Blockchain enables the tokenization of real-world assets (RWA·Real World Asset) such as real estate, bonds, and private equity that were previously inaccessible. Being able to sell to a broader base of investors means new sales are created.
The regulatory environment has also changed. With the passage of stablecoin legislation in the United States and the Securities and Exchange Commission (SEC·Securities and Exchange Commission) shifting to a virtual asset-friendly stance, a path has opened for institutions to participate legally.
─What is the significance of both sides of Blockchain: infrastructure development and as an investment asset?
Blockchain has two functions. One is its value as an investment asset, such as Bitcoin and Ethereum; the other is its value as financial infrastructure, such as stablecoins and tokenization. On the investment asset side, as institutional funds flow in in earnest through Bitcoin exchange-traded funds (ETF·Exchange Traded Fund), its status as digital gold is solidifying.
On the infrastructure side, stablecoins are the key. The stablecoins of Tether and Circle already process transactions worth trillions of dollars annually and have begun to replace the payment, remittance, and trade finance infrastructure of traditional finance. What matters is that these two reinforce each other. Interest as an investment asset supplies funds for infrastructure development, and as the infrastructure advances, more institutional money flows into investment assets.
─If you forecast changes in this industry in the near future?
Projects that prove real value will become more solid, and those without substance will be weeded out. Stablecoins will become the central axis of financial infrastructure. Starting with the passage of the U.S. stablecoin bill, each country will craft regulation for stablecoins based on its own currency, and this will drive structural change in the existing payments and remittances industry. Now, as institutions come in, the industry is shifting into a maturation phase.
─What opportunities does Korea have amid these changes?
Korea has the most active virtual asset market in the world. Thirty-two percent of the population has a virtual asset account, and daily trading volume reaches up to about 14 trillion won. If institutions are layered onto this base, it could become a market with no global precedent.
That said, a policy decision is needed on a won-based stablecoin. If we are not to fall behind the global trend, swift policy preparation is an urgent priority. If we miss this timing, Korean financial institutions could fall behind in global competition. Ultimately, Korea's opportunity lies in the trifecta of an active virtual asset market, prepared institutions, and evolving regulation. This combination is hard to find in Asia or globally, and it is a strength Korea possesses.