South Korea's Banking Giants Race to Lock In Stablecoin Alliances

South Korea's largest financial institutions are pre-positioning for stablecoin issuance before the regulatory framework exists. Six banking groups have now joined a Hana Financial Group-led alliance, while big tech conglomerate Kakao runs a rival coalition, creating a two-bloc structure that will likely define the country's stablecoin market before legislation passes.

The Democratic Party government wants to overturn a 2019 ban on domestic token issuance by the end of February. The scramble to form alliances before that deadline reveals what's actually at stake: first-mover infrastructure advantages in a market of 52 million people with one of the world's highest crypto adoption rates.

The Alliance Structure

Hana Financial Group launched its stablecoin consortium last week with BNK Financial Group, iM Financial Group, Standard Chartered Bank Korea, and OK Savings Bank. JB Financial Group joined January 21, bringing the alliance to six members.

The consortium has agreed to create a special-purpose company for won-pegged stablecoin issuance once legislation passes. Sources indicate discussions are already underway with travel firms and insurance providers, suggesting the alliance is building distribution partnerships before the product exists.

On the other side: Kakao, which launched a stablecoin task force in August 2025 through its banking and e-pay subsidiaries. The tech giant began development work on a Kakao-branded won stablecoin in November.

The competitive dynamics are telling. JB Financial Group and BNK Financial Group—mid-sized firms with a combined market cap of approximately $6.4 billion—reportedly held cooperation talks with Kakao before joining the Hana alliance. Market observers initially expected Kakao's consumer platform advantages to dominate. The defection suggests banks see more value in financial institution-led infrastructure than tech platform distribution.

The Regulatory Compromise

South Korea's central bank has resisted allowing big tech companies to issue won-pegged stablecoins, despite government enthusiasm for rapid legislation. The emerging compromise: only consortia comprising major banks would receive issuance licenses.

This framework explains the alliance formation pattern. Regulators are effectively requiring collaboration rather than competition, and institutions are racing to secure their positions in winning coalitions before the rules finalize.

The structure mirrors what we analyzed in KakaoBank's stablecoin infrastructure development, but the competitive landscape has shifted. What looked like a Kakao-dominated market six months ago now features a credible bank-led alternative with broader institutional backing.

Why Local Currency Conversion Matters

The Hana alliance reportedly plans to initially "pursue a project to convert local currencies into stablecoins." This refers to South Korea's regional digital currency programs—won-based local currencies launched in recent years to stimulate provincial economic growth.

The 2019 token ban forced these programs to operate as digital vouchers rather than blockchain-based tokens. Converting existing local currency infrastructure to stablecoin rails would provide immediate transaction volume and established user bases, which is a faster path to scale than building consumer adoption from zero.

Strategic Implications

For global stablecoin competition: South Korea becomes the second major Asian economy to advance domestic stablecoin frameworks, following Japan's regulatory clarity. A February legislation timeline would put Korean won stablecoins on track for 2025 launches, potentially before U.S. stablecoin legislation finalizes.

For the bank vs. tech platform debate: The consortium requirement forces an answer to who controls stablecoin infrastructure. Korea's compromise—bank-led consortia with tech participation rather than tech-led issuance may influence regulatory thinking elsewhere.

For institutional positioning: Financial groups that secure alliance membership now lock in infrastructure access. Those left out face either joining as junior partners or being excluded from won stablecoin issuance entirely.

The February deadline creates urgency that benefits first movers. South Korea's stablecoin market structure may be effectively decided in the next six weeks, before legislation passes, before products launch, and before consumers make any choices at all.