South Korea's CBDC plan falters──Kakao Bank enters the stablecoin competition | CoinDesk JAPAN

• Kakao Bank is considering entering the South Korean stablecoin sector and is contemplating its role in issuance and custody.
• The participation of the same group follows the Bank of Korea's halt of the trial operation of the CBDC in response to a new bill regarding the issuance of stablecoins.
• The company is establishing a dominant position in the stablecoin market through its experience in digital asset compliance and operations.

According to local reports, KakaoBank is preparing to enter the rapidly growing stablecoin sector in South Korea.

Kakao Bank's Chief Financial Officer (CFO), Kwon Tae-hoon, stated during the first half of the financial results announcement on the 5th that the bank is "actively considering" both the issuance of stablecoins and custodial roles, and will participate in accordance with South Korea's changing digital asset policies.

"We are actively working on a plan to adapt to market changes," said Mr. Kwon, adding that Kakao Bank's internal task force is collaborating with other divisions of Kakao to integrate strategies.

As a result of this move, following the Bank of Korea (BOK) suspending the trial operation of the central bank digital currency (CBDC) in June, regulated online banks will be added to the list of South Korean fintech companies entering the stablecoin competition.

As CoinDesk previously reported, this project had reached the testing phase with commercial banks, but was abruptly halted after President Lee Jae-myung's administration submitted a bill to allow the local issuance of stablecoins.

Achievements in CBDC Pilot Operations

Mr. Kwon emphasized that Kakao Bank is technically prepared and noted that the company had participated in both phases of the BOK's trial operations, which are currently suspended.

"We built and operated the wallet and processed exchanges and remittances," said Mr. Kwon, pointing out that most companies in this sector still lack operational experience.

Mr. Kwon also mentioned the three-year compliance operation to issue real-name accounts for cryptocurrency exchanges. He stated that this gives Kakao Bank a favorable start in the implementation of the KYC (Know Your Customer) and AML (Anti-Money Laundering) frameworks that regulators may require for tokens pegged to fiat currency.

Kakao Bank is working together with Kakao Pay and its parent company group as a member of a task force focused on stablecoins that is held weekly within the Kakao ecosystem. Chung Shin-ah, CEO of Kakao, Shin Won-keun, CEO of Kakao Pay, and Yoon Ho-young, CEO of Kakao Bank are leading this initiative.

Circle stocks are gaining popularity in South Korea

The conversion to stablecoins has triggered a wave of speculation and activity among individual investors in the South Korean market. Shares of Circle, which went public in June, became the most purchased foreign stock among individual investors in South Korea.

This movement is occurring in parallel with Hong Kong's stablecoin plan, in which local companies are lining up to obtain issuance licenses, following the fact that the People's Bank of China's (PBoC) interest in a CBDC did not materialize.