Korea’s Won Stablecoin Debate Should Start With Use Cases, Not Issuers, KIF Says
Summary
- Jee said policymakers should review specific use plans and feasibility before deciding on the issuer when designing a won stablecoin framework.
- He said Hong Kong authorized HSBC and Anchorpoint Financial to issue Hong Kong dollar-pegged stablecoins and specified use cases including cross-border payments, tokenized-asset trading and supply-chain finance.
- The market sees the debate over a won stablecoin gaining momentum, with issuers, reserve-asset management and use cases in payments, asset tokenization and trade finance emerging as the key issues.
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South Korea should assess specific use cases and the feasibility of a won-denominated stablecoin before debating who should be allowed to issue it, according to a policy recommendation from the Korea Institute of Finance. The institute cited Hong Kong as a reference point, arguing that policymakers need to design practical applications such as cross-border payments, regional settlements, tokenized-asset trading and supply-chain finance.
Jee Man-soo, a senior research fellow at the Korea Institute of Finance, told iNews24 in a June 20 report that Hong Kong’s stablecoin policy offers a useful model for South Korea as it draws up its own framework.
He highlighted Hong Kong’s approach of building an issuance system around operators affiliated with HSBC and Standard Chartered while going beyond licensing to spell out how the tokens would be used. Hong Kong has mapped out stablecoin applications in cross-border payments, regional settlements, tokenized-asset trading and supply-chain finance, he said.
The Hong Kong Monetary Authority granted stablecoin issuance licenses in April to HSBC’s Hong Kong unit and Anchorpoint Financial. Both plan to begin issuing stablecoins pegged one-to-one to the Hong Kong dollar in the second half of the year.
Anchorpoint Financial is a joint venture established by Standard Chartered’s Hong Kong unit, Animoca Brands and Hong Kong Telecom. HSBC is set to focus on retail and merchant payments and purchases of tokenized assets by individuals. Anchorpoint Financial is set to target corporate cross-border payments and supply-chain finance.
Hong Kong is pursuing stablecoins not just as a standalone payment instrument but as part of a broader digital-currency strategy tied to central bank digital currencies, tokenized deposits and assets, and cross-border payments. The Hong Kong Monetary Authority has advanced Project LionRock, a CBDC development initiative, mBridge, a multilateral real-time cross-border payments pilot, and Project Ensemble, an experiment involving tokenized deposits and assets.
HSBC, Standard Chartered and Animoca Brands, which were selected this time, have also taken part in those pilot programs. Jee said the Hong Kong Monetary Authority appeared to consider not only regulatory compliance but also alignment with its digital-finance strategy, clear use plans and the ability to execute them when choosing operators.
He said Hong Kong’s plans for cross-border payments and supply-chain finance reinforce the city’s strengths as a hub for entrepot trade and trade finance. For South Korea, that means the won stablecoin debate should start with what problems such a token could solve in the domestic financial and payments system.
Jee described Hong Kong as a representative case of regulator-led, bank-centered stablecoin issuance. He added that policymakers also need to watch for the structural effects that diversification and digitization of cross-border payment methods could have on the international monetary system.
As debate over a won stablecoin intensifies, the market is focusing on real-world use cases and institutional linkages as well as issuers and reserve-asset management. Analysts say that, as in Hong Kong, authorities will need to design specific applications in payments, asset tokenization and trade finance alongside the regulatory framework for the system to be effective.
