Stablecoins could save South Korean merchants up to $3.8 billion a year, budget office says

Won-denominated stablecoins could reduce South Korean merchants’ annual payment fees by between 370 billion won ($275 million) and 5.15 trillion won, the National Assembly Budget Office said.

The parliamentary budget office’s analysis estimated the savings under different assumptions about how much card spending moves to stablecoin payments and the fees those systems charge.

Stablecoins are tokens designed to track the value of assets such as national currencies. A won-backed coin could give South Korean businesses a domestic alternative to a market dominated by dollar-linked stablecoins, which accounted for 98.8% of the $312.3 billion global stablecoin market in July, the office said.

South Korea is still developing the rules that would govern that market. Its first major crypto investor protection law took effect in July 2024, covering customer assets and unfair trading.

Who gets to issue those tokens has been a central dispute. Earlier negotiations split the Bank of Korea and the Financial Services Commission, with the former favoring issuers controlled by banks with at least 51% ownership, while the latter warned that restrictions could hinder innovation.

The budget office also pointed out that money moving out of bank deposits could weaken banks’ role as credit intermediaries. A wave of redemptions, it said, might force issuers to dump reserve assets, which could break the token’s peg and crack confidence in the stablecoin.

The budget office also called for reserve requirements, limits on stablecoin rewards and stronger oversight of tokens that could pose risks to financial stability.

Stablecoins could also play a role beyond retail payments. The Financial Services Commission has said that South Korea plans to begin expanding tokenized securities in February 2027, with a later stage linking blockchain-based securities markets to stablecoin payment infrastructure.

The push comes as policymakers study how wider stablecoin use could affect currency markets. A Bank of Korea study published earlier this month found that direct trading between local currencies and dollar stablecoins on Binance can push local currencies lower.

The budget office also found that links between dollar stablecoins traded in South Korea and markets including bitcoin BTC$78,327.00, foreign exchange, stocks and interest rates remain limited. Those connections could become stronger during periods of geopolitical stress or broad dollar strength, it said.