Author: Zen, PANews

The South Korean stablecoin market is facing a crucial "breakthrough moment." Over the past two weeks, from open signals from top central bank officials to substantial progress in the legislative process, coupled with frequent high-level meetings between Circle and Tether, the two giants, all signs indicate that South Korea's regulatory framework for stablecoins has moved beyond principled discussions and officially entered the deep waters of institutional design and interest-based competition.

For global issuers, South Korea is no longer a distant market to be cautiously observed, but a preliminary battle for a place at the interface of the future digital financial system, and is becoming an important market that needs to be secured in advance.

From Prohibition to Regulation : Stablecoin System Design Enters a Critical Stage

Recently, the shift in policy direction at the top level has become clearer. On April 14, Shin Hyun-song, the nominee for governor of the Bank of Korea, stated that the Korean won stablecoin will play a role in the future monetary ecosystem, and that it can form a complementary yet competitive relationship with central bank digital currencies and deposit tokens. This statement is more open than before and has been interpreted by the market as a clear signal of a change in policy atmosphere.

Earlier, senior officials at the Bank of Korea had proposed a gradual introduction of a stablecoin for the Korean won, prioritizing issuance by strictly regulated commercial banks and then expanding to non-bank institutions based on experience. This indicates that South Korea's regulatory approach is not one of complete liberalization, but rather emphasizes first incorporating it into the banking system before discussing broader market expansion.

Alongside this is the deposit token experiment codenamed "Project Han River." The Bank of Korea has moved the pilot program to its second phase, expanding the number of participating banks to nine, and plans to extend the application of deposit tokens to more real-world payment scenarios. The public sector has also begun testing its use for subsidies and fiscal spending, indicating that South Korea is exploring an institutionalized path for bank-based digital currencies.

Therefore, the current focus of discussion in South Korea is no longer simply "whether to allow stablecoins," but rather how to establish a tiered structure among Korean won stablecoins, deposit tokens, and US dollar stablecoins. Who can issue them, how foreign institutions can enter, and what role local financial groups should play have become the core of the next stage of institutional competition.

What is currently forming in South Korea is not a single path; a three-pronged system is emerging, with bank-led deposit tokens at its core, a regulated Korean won stablecoin as a supplement, and conditionally accessible foreign dollar stablecoins as an extension . Who is qualified to issue these tokens, how foreign institutions can operate compliantly, and what role domestic financial groups will play have become the core issues in the next stage of institutional competition.

Circle and Tether accelerate their positioning: Two different paths for South Korea to enter the fray.

During this window of opportunity, Circle's strategy is the clearest and best suited to the current regulatory preferences in South Korea.

On April 13, Circle co-founder and CEO Jeremy Allaire stated at an event in Seoul that Circle does not intend to issue its own Korean won stablecoin. In his view, a more likely model is for a consortium of local Korean banks, fintech companies, and digital asset operators to lead the issuance of the Korean won, while Circle provides mature stablecoin operation technology, platform capabilities, and cross-chain infrastructure support .

Furthermore, Allaire publicly stated that if South Korea's future Digital Asset Basic Law provides a compliant entry path for overseas stablecoin issuers, Circle is willing to apply for a license and establish a local corporation in South Korea. This statement reflects both the regulatory reality in South Korea and Circle's intention to enter the market as a technology and platform provider.

Circle is employing a four-pronged approach in South Korea: actively communicating with regulators, negotiating partnerships with banks, and exploring the possibilities of establishing exchanges and piloting payment systems. Public information shows that Circle has discussed cross-border remittances, settlements, and RWA technical support with financial institutions such as KB, Shinhan, and Hana, and is also advancing cooperation with platforms like Dunamu and Bithumb.

More notably, Circle is also evaluating the future entry framework for overseas stablecoin issuers under South Korea's Digital Assets Basic Law. Its public stance is not short-term marketing, but rather a long-term entry strategy centered on licensing, local entities, and technological cooperation. Rather than saying Circle is "selling a coin" in South Korea, it's more accurate to say it's attempting to secure a foothold in the infrastructure .

In contrast, Tether's public activities in South Korea have been more low-key, but not absent. In early April, Tether representatives visited South Korea and met with institutions such as KB Financial Group and Coinone to discuss potential collaborations. Disclosures indicate that this visit continued its pace of engagement since last year, aiming to expand the circulation and trading of stablecoins.

Tether's narrative in South Korea also leans more towards the demand side. In late March, Tether representatives attended the AMCHAM Korea stablecoin event, where topics included global adoption, market expansion, and cross-border liquidity. South Korean media subsequently quoted them as saying that South Korea lags behind in global payment infrastructure, and stablecoins could provide a more efficient tool for cross-border e-commerce, tourism spending, and international settlements.

In comparison, Circle seems to be embedding itself into the regulatory framework in line with South Korea's regulatory logic. It accepts the reality that Korean won stablecoins are likely to be issued primarily by local institutions, thus emphasizing its technology stack, payment network, and local compliance interfaces. Tether, on the other hand, seems to be focusing on the needs of trading, circulation, and payment, hoping to first solidify the use cases of its USD stablecoin network in South Korea.

This difference determines that the two companies have different focuses in South Korea. Circle's strategy is more open and systematic, aiming for long-term operating qualifications after the policy is implemented; Tether's strategy is more focused on business contacts and network expansion, with an emphasis on increasing the trading and payment penetration of USDT. The former is more policy-oriented, while the latter is more liquidity-oriented.

On the eve of the battle for the South Korean stablecoin market

Going forward, the South Korean stablecoin market will likely continue to move towards localization, tiered development, and a gradual approach, with full liberalization still a long way off. The Democratic Party of Korea has requested that relevant bills be advanced in the National Assembly's bill committee meeting at the end of this month, but due to procedural constraints, local elections, and other priority issues, achieving a true legislative consensus will still take time.

The current controversy still focuses on several core issues, including whether the issuers of Korean won stablecoins should be banks, whether non-bank and fintech companies can participate, how to design restrictions on major shareholders of virtual asset exchanges, and whether overseas issuers must set up local branches and accept additional reserves or foreign exchange regulatory requirements.

In the short to medium term, South Korea is more likely to prioritize the development of its domestic won stablecoin and bank-issued deposit tokens before deciding on the specific access boundaries for foreign stablecoins.

For Circle and Tether, the current competition is not just about market share, but about who can enter the core interface layer of South Korea's future digital currency system first.