Kakao Group has entered into a strategic partnership with stablecoin issuer Circle to investigate payment infrastructure for won-backed stablecoins, as South Korea prepares to implement a comprehensive regulatory framework for digital assets.
Partnership Details and Future Plans
On Thursday, Kakao, its subsidiaries Kakao Pay and Kakao Bank, and Circle Internet Group finalized a memorandum of understanding aimed at connecting Circle’s blockchain expertise and global payments systems with Kakao’s widely used financial and consumer platforms.
The collaboration is set to explore the integration of stablecoin payments, cross-border money transfers, merchant settlement solutions, and interoperability between existing financial systems and blockchain networks. The companies also intend to assess potential support for tokenized financial products, although specific services or launch timelines have not been disclosed.
This agreement underscores how significant South Korean digital and financial platforms are positioning themselves in anticipation of imminent stablecoin regulations, regardless of the current lack of finalized rules.
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Regulatory Landscape in South Korea
South Korea is currently developing legislation for won-backed stablecoins as authorities focus on encouraging digital payment innovation while managing risks related to reserves, redemptions, and issuer oversight. Policymakers are preparing a bill that would introduce standards for stablecoin issuance, collateral controls, and internal risk management.
Several legislative proposals have been presented, with increased interest in won-pegged stablecoins as a means to decrease reliance on the US dollar in domestic transactions. However, the lawmaking process has slowed due to differences over which institutions should be entitled to issue these new forms of digital money.
The Bank of Korea has advocated for banks to hold majority shares in stablecoin issuers, taking the position that this approach would defend consumer interests. Meanwhile, the Financial Services Commission has expressed concern that such eligibility restrictions could deter competition and stifle innovation.
In a strategic update released on July 14, the government included advancement of the Digital Asset Basic Act on its agenda for the second half of 2026, further signaling the sector’s growing importance.
Industry Pilots and Testing
Despite the ongoing policy debates, major companies and financial institutions are already conducting tests involving stablecoin and blockchain technology in South Korea. In April, Kbank, an online banking provider, joined forces with Ripple to pilot blockchain-based remittance solutions.
In May, KB Financial Group completed a pilot program on the Kaia blockchain, focusing on stablecoin issuance, offline merchant payments, and international transfers. The group indicated readiness to roll out stablecoin services as soon as the regulatory environment allows.
