"Central Bank Digital Currency (CBDC) and stablecoins are not tools that compete with each other. They will each take on different roles."
Dante Disparte, Circle's chief strategy officer (CSO), met with ChosunBiz on the 23rd in Yeoksam-dong, Gangnam-gu, Seoul, and said, "CBDC is mainly a tool for domestic payment innovation, while stablecoins are programmable money (digital money that executes an automatic transaction when conditions are met) used on the internet and global financial networks."
During this visit to Korea, Circle, which signed a memorandum of understanding (MOU) for cooperation on payment infrastructure with Kakao(035720) Group and Toss, gave high marks to Korea's Fintech and payment systems. CSO Disparte said, "Korea already has highly advanced Fintech and real-time payment systems globally," adding, "What matters is what additional functions CBDC will provide that private financial firms do not currently offer."
As the Bank of Korea has recently accelerated experiments with CBDC and deposit tokens and other forms of digital money, some expect that private stablecoins and digital money issued by the Central Bank will end up in competition. CSO Disparte, however, projected that in the future digital financial market, CBDC, bank deposit tokens, and private stablecoins are highly likely to coexist while each performs its function.
He cited internet-based openness and programmability as strengths of stablecoins. Stablecoins can be combined with other services and split into small units for real-time payments, making them suitable for cross-border payments or transactions among artificial intelligence (AI) agents, he said. The following is a Q&A with CSO Disparte.
—The Bank of Korea is actively pushing CBDC. What is the relationship between CBDC and stablecoins?
"The two tools serve different purposes. CBDC is fundamentally a tool for domestic payment innovation. Because Korea already has highly advanced Fintech and payment systems, what matters for CBDC is what functions it will add that private financial firms do not currently provide.
By contrast, stablecoins are digital money that operate directly on the internet. Because they are software, they can be programmed, can combine with other services like Lego blocks, and can be split into units smaller than 1 cent. Rather than competing, CBDC and stablecoins are more likely to take on their respective roles. A desirable structure is one in which various forms of digital money—CBDC, bank deposit tokens, and private stablecoins—coexist and are connected to each other."
—Some say that if there is a CBDC, a won stablecoin is unnecessary, or the reverse.
"CBDC and a won stablecoin have different roles. If CBDC is an innovation in domestic public payment infrastructure, a won stablecoin can serve to connect Korea's private financial ecosystem to the global digital financial network. A won stablecoin can keep the Bank of Korea's monetary sovereignty goals and Koreans' preference for won-denominated currency while enabling participation by domestic banks, Fintechs, and developers. If the won circulates in digital form alongside the dollar and other international currencies, faster and cheaper foreign exchange transactions, cross-border payments, and instant settlement will become possible."
—The won is less used internationally than the dollar. Will there be sufficient demand for a won stablecoin?
"It is true that the dollar is in a very advantageous position. Since World War II, the dollar has secured overwhelming liquidity and network effects in global trade and financial markets. But that does not mean the future digital money market will consist only of the dollar. If governments want to internationalize their currencies or maintain their currencies' presence in the digital economy, they can use stablecoins."
—There are concerns that the spread of dollar stablecoins could threaten Korea's monetary sovereignty.
"The best way to prepare for the possibility that the dollar becomes the dominant digital currency is not to try to block it. Your own currency should be reflected on digital networks in public or private form. Domestic banks and payment operators must also be able to provide on- and off-ramps (conversion between cash and digital assets) that convert digital money into won or convert won into digital money.
The worst response is to build a 'digital money firewall.' People can choose the overseas digital economy via their mobile phones. Rather than pretending it doesn't exist, it is better to build and localize domestic industries and markets."
—What is the first issue that must be resolved for stablecoin-related services to become commercialized in Korea?
"Regulatory clarity. What we have seen in Europe and the United States is that large financial institutions do not move prototypes into live services until they have legal and regulatory certainty. Korean financial firms can research and experiment with stablecoins, but to shift to large-scale commercial services, clear standards from the National Assembly's legislation and the regulatory authorities are needed."
—What specifically did you discuss with Korean financial authorities?
"Many policymakers are curious about what changes the U.S. Genius Act and Europe's MiCA have brought to the market. Korean counterparts showed interest in the recent U.S. regulatory changes, competition in the stablecoin market, and Circle's global business structure. We call these activities 'regulatory diplomacy.' It is not merely explaining our business, but providing the experiences and information countries need when designing regulation."
—What principle should Korea consider most importantly when designing regulations?
"Regulation should promote, not block, competition. In Europe, more than 30 euro stablecoin issuers have come under regulation since MiCA took effect. In the United States as well, after the Genius Act was enacted, many corporations applied for bank charters and related licenses.
Also, consumers must be able to redeem stablecoins for legal tender at any time. If they put in $1 or 1 won, they must be able to get the same amount back at any time. Reserve assets, transparency, audits, and anti-money-laundering responsibilities must also be clear. Trust does not come from declarations; it must be proven with real assets, regulatory compliance, and accountability structures."
—You signed MOUs with Korean Fintechs on this trip. What change will consumers notice first going forward?
"Stablecoins will eventually be embedded in mobile applications like Kakao Pay or Toss. Users will send money or make payments instantly within apps without being consciously aware of the Blockchain. The uses of digital money can be broadly divided into sending, spending, saving, and safekeeping.
Roles can be divided so that CBDC supplements the domestic public payment base while private stablecoins support global remittances and payments and new digital services. From the consumer's perspective, what matters is not which technology is used but that financial services are faster, more convenient, and cheaper."