Author: Lee Yeon-woo, The Korea Times
Compiled by: Felix, PANews
As momentum for the launch of won-denominated stablecoins continues to grow, so too has skepticism. Some question whether won-denominated stablecoins can find a competitive advantage in the face of dollar-dominated stablecoins.
One proposed use case, backed by lawmakers from the Democratic Party of Korea (DPK) and some industry officials, is in transactions related to K-pop music.
They suggested that K-pop platforms adopt won-backed stablecoins so that global fans can more easily shop or buy concert tickets.
“If dollar-denominated stablecoins flood the market, the won could be squeezed out of circulation,” said Rep. Min Byoung-dug at an economic policy seminar organized by the Democratic Party.
“To protect part of the payment ecosystem, we should allow content and platforms with global influence, such as BTS and Galaxy smartphones, to trade in won-based stablecoins.”
Stablecoins are cryptocurrencies pegged to real-world assets such as fiat currencies or government bonds, designed to minimize volatility. They enable instant, 24/7 transfers with minimal fees. No intermediaries such as banks or credit card companies are required. Stablecoins are particularly useful for cross-border transactions and withdrawals.
The potential application of stablecoins is expected to expand further, especially after the United States passed the Genius Act, officially incorporating stablecoins into its regulatory framework.
Supporters of using stablecoins in K-pop payments believe that stablecoins backed by the Korean won can significantly improve South Korea's cross-border payment infrastructure.
DeSpread research analyst Declan Kim said: "Stablecoins can simplify the payment process for overseas customers and eliminate the hassles of remittances and currency conversions that usually occur when accessing Korean content."
K-pop group BLACKPINK's Rosé performs at the Incheon Asian Games Main Stadium
International K-pop fans also agree that the current payment system is flawed. They told The Korea Times that some websites and apps do not accept foreign-issued bank cards - especially those services that require identity verification. In addition, payment systems often crash during high-traffic times, such as concert ticket sales.
With a stablecoin system, fans can buy won-denominated stablecoins through cryptocurrency exchanges and send them directly to the purchasing account, completing transactions more efficiently.
For suppliers, the benefits are obvious. Once the system is widely adopted, profitability is expected to increase by eliminating foreign exchange fees and high transaction fees that are previously paid to networks such as Visa.
There is also the potential for additional revenue. Imagine if SMTOWN (Note: the collective name of all artists under S.M.Entertainment, the largest entertainment agency in South Korea) launched its own stablecoin, such as SMKRW, and used it to sell merchandise directly to fans. The company could earn interest on the funds pre-loaded in users' wallets, just like Starbucks' stored-value cards.
But for consumers, the incentive may not be strong enough—unless certain products are sold exclusively in won-backed stablecoins.
The current payment system can be frustrating at times, but it’s not unusable. Globally popular platforms like Weverse have already introduced a variety of international payment methods.
In addition, although finance professionals often forget, a large part of the public is still unfamiliar with cryptocurrencies. If not introduced properly, stablecoin systems could end up being more cumbersome than the traditional payment methods they are designed to replace.
Ryan Yoon, senior research analyst at Tiger Research, said: "The core advantage of stablecoins is that they can eliminate unnecessary intermediaries in the financial system. The most critical factor is to ensure that consumers do not need to manually convert to stablecoins, making this process seamless and not affecting the user experience."
Teens practice K-pop dances on the streets near Red Square in Moscow on July 1
While some international K-pop fans have expressed interest in the idea of changing the payment experience, others have expressed hesitation. Most said they had never heard of stablecoins before.
One fan from the Philippines likened the move to the previous wave of NFT projects in the K-pop industry, which ultimately failed to take off. "They think K-pop fans are easy to market to, but we are more picky."
Another fan questioned whether policymakers truly understand the fan experience. "The government should abandon the idea that 'if we build it, fans will participate.'" "We can't help but wonder if the policymakers have ever bought tickets to K-pop concerts themselves."
Like it or not, it's still just an idea for now. The Democratic Party of Korea has begun pushing for legislation to formalize the framework for a stablecoin based on the won, but specific guidelines have yet to be determined.
Jay Jo, another senior research analyst at Tiger Research, said: "A currency that is limited to use in a single industry, rather than being widely used in various industries, is unlikely to achieve economies of scale. It is important to consider what tangible benefits a won-backed stablecoin can bring to the Korean economy, and should not focus on a single use case."
