Kakao Partners with Circle to Explore a Korean Won-Pegged Stablecoin
South Korean giant Kakao is joining forces with Circle, the issuer of USDC, to lay the foundation for a payment infrastructure built around a won-pegged stablecoin. This announcement comes as Seoul accelerates the drafting of its regulatory framework for digital assets, signaling a pivotal moment for the country’s crypto ecosystem.
Kakao, Kakao Pay, and Kakao Bank Unite with Circle
This news underscores South Korea’s growing ambitions in the stablecoin space. On Thursday, July 23, 2026, Kakao Group — the conglomerate behind the popular messaging app KakaoTalk — announced a strategic memorandum of understanding (MOU) with Circle Internet Group. The entities involved include Kakao itself, Kakao Pay (its payment arm, which boasts millions of users in South Korea), and Kakao Bank (the group’s neobank).
The agreement outlines joint exploration of several major use cases: stablecoin payments, cross-border money transfers (remittances), merchant settlement, and the connection between traditional financial systems and blockchain networks. The partners also plan to support tokenized financial services, although no specific products or launch timelines have been disclosed at this stage. This collaboration leverages Kakao’s extensive user base and Circle’s expertise in regulated stablecoins, creating a powerful combination for the Korean market.
South Korea Prepares the Regulatory Ground
This initiative takes place within a rapidly evolving regulatory context. The South Korean government is preparing a specific law to govern won-backed stablecoins, as part of the broader “Digital Asset Basic Act.” On July 14, the executive branch listed this legislation among its priorities for the second half of 2026 within its economic growth strategy.
The proposed bill would establish requirements covering stablecoin issuance, collateral reserve management, and internal controls. Several competing proposals have been submitted by lawmakers. However, the regulatory process is stalled by a major disagreement: which institutions should be allowed to issue won-pegged stablecoins?
On one side, the Bank of Korea (BOK) argues that banks should hold a majority stake in stablecoin issuers. On the other, the Financial Services Commission (FSC) believes that overly strict eligibility restrictions could stifle innovation and favor unregulated foreign players. This institutional tug-of-war is delaying the final adoption of the text, leaving market participants in a state of anticipation.
Korean Financial Giants Already in the Race
Kakao is not the first Korean conglomerate to show interest in stablecoins. In April 2026, online bank Kbank partnered with Ripple to test blockchain-based transfers. In May, KB Financial Group conducted a comprehensive pilot covering stablecoin issuance, offline merchant payments, and cross-border transfers via the Kaia blockchain. The group indicated it is preparing to scale these services.
Kakao’s entry, alongside Circle, adds a new dimension: that of an actor mastering messaging (KakaoTalk, with 50 million active users in South Korea), payments (Kakao Pay), and banking (Kakao Bank, launched in 2017 and now one of the world’s most profitable neobanks). This triple expertise gives the project unique credibility in the Korean market, as it can integrate stablecoin services into everyday financial activities seamlessly.
Why a Won-Pegged Stablecoin Changes the Game
South Korea is the fourth-largest economy in Asia and one of the most dynamic markets for cryptocurrencies. The Korean won (KRW) is among the most traded fiat currencies against Bitcoin globally, regularly accounting for 5 to 10% of total BTC trading volume. Yet, there is currently no regulated, nationally scaled won-pegged stablecoin in circulation.
A KRW stablecoin issued by Circle in partnership with Kakao could achieve several key objectives:
- Facilitate international transfers for the 7.5 million Koreans living abroad and immigrant workers in South Korea
- Reduce exchange and transfer fees in a country where remittances amount to billions of dollars annually
- Offer an alternative to dollar-pegged stablecoins (USDC, USDT) for domestic and regional transactions
Enable Korean exchanges (Upbit, Bithumb, Korbit) to offer stable KRW trading pairs without relying entirely on the traditional...
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