Following the inauguration of President Lee Jae-myung, Kaia, a prominent layer-1 blockchain, has committed to rolling out a stablecoin pegged to the South Korean won. Lee, an advocate for crypto-friendly regulations, has set several crypto-related objectives during his campaign, distinguishing him from other candidates in the field.
Despite the legal ambiguities surrounding stablecoin issuance due to South Korea’s constitution granting currency issuance rights exclusively to the Bank of Korea, Lee’s Democratic Party is progressively tilting towards innovation in the private sector. Min Byoung-dug, the head of the party’s Digital Asset Committee, has shown support for private sector-issued stablecoins and is set to propose the Digital Asset Basic Act, a comprehensive legislative framework for the cryptocurrency industry.
The tech giant Kakao backs Kaia’s interest in stablecoins. Kakao is the force behind a vast array of South Korea’s essential digital services, including messaging, navigation, and finance.
With the new administration in place, both traditional and cryptocurrency investors in the country have expressed their excitement. According to a survey by the Korea Chamber of Commerce and Industry, nearly 60% of respondents are planning to increase their crypto holdings under Lee’s administration. This optimism was reflected in the stock market on Monday, with payment companies Kakao Pay and competitor Danal both seeing a 29.9% increase.
Widely recognized as a potential beneficiary of a domestic stablecoin due to its digital wallet infrastructure and QR code payment system, Kakao Pay is the fintech subsidiary of Kakao. The latter’s Web3 subsidiary developed the Klaytn blockchain, which has now merged with the Japanese messaging service LINE-backed Finschia to form Kaia.
The increased confidence in the speedy advancement of stablecoin regulation is also mirrored in the stock market rally. Kim Yong-beom, formerly a vice finance minister and recently the head of research at blockchain venture capitalist firm Hashed, has been designated as President Lee’s chief policy advisor.
The proposed Digital Asset Basic Act by lawmaker Min is anticipated to include sections legalizing and supervising won-pegged stablecoins, indicating growing legislative support for the initiative.
Although Lee’s presidency has been overshadowed by his ongoing criminal trials, the Seoul High Court recently ruled that the President’s immunity from criminal prosecution applies, thus indefinitely delaying the trials. This ruling effectively paves the way for Lee’s administration to pursue its cryptocurrency agenda.
