Stablecoins should be treated as both payment tools and investment assets, requiring a comprehensive regulatory framework, a new research suggests.
A stablecoin tied to the Korean won could give South Korea a stronger footing in the global stablecoin race, according to a recent report from think tank Hashed Open Research and Four Pillars.
The report, published on Mar. 24, suggests that launching a won-based stablecoin might make the currency more practical for digital transactions while also bridging the gap between Korea’s crypto market and international digital asset ecosystems.
According to the report, the introduction of a KRW stablecoin “could help address structural inefficiencies in the Korean crypto market,” as well as “serve as the foundation for various fintech industries that emerge from this ecosystem.” Hashed Open Research notes that the high liquidity of Korean exchanges could provide an advantage for a KRW stablecoin over alternatives like the yen or euro.
While boosting the use of won-pegged stablecoins, the report also highlights concerns over the rapid rise of dollar-based stablecoins, such as Tether (USDT) and USD Coin (USDC), which could be exacerbating capital outflows from the country. The report cautions that capital outflows from Korea’s crypto market could grow into a bigger issue, potentially impacting the country’s financial stability and the strength of the won.
In the report, Hashed Open Research calls for a dedicated regulatory framework for stablecoins, saying these assets “possess characteristics of both payment instruments and investment assets, requiring a dedicated regulatory framework.” The report suggests allowing both banks and non-banks to issue stablecoins under strict licensing and security requirements.
Additionally, it proposes that foreign-issued KRW stablecoins should be regulated domestically, while foreign stablecoins pegged to other fiat currencies should only be allowed if they meet equivalent regulatory standards.
