The stock market in South Korea has experienced a remarkable surge fueled by enthusiasm for won-pegged digital currencies, following the commitment of newly elected President Lee Jae-myung to endorse stablecoins supported by the national currency.
Key Insights:
South Korea’s Kospi index has soared nearly 30% year-to-date over the past week.
This bullish trend is primarily attributed to President Lee’s promise to back won-based stablecoins.
Companies such as Kakao Pay and ME2ON have witnessed significant stock increases as retail investors engaged heavily in crypto-related shares.
Since President Lee’s announcement, shares of firms associated with the Bank of Korea’s digital currency project, such as Kakao Pay and LG CNS, have skyrocketed. In fact, Kakao Pay’s value has more than doubled this month, while LG CNS saw a rise of nearly 70% before experiencing a slight decline, according to the Financial Times.
On the Kosdaq junior market, the fintech security company Aton reported an 80% surge in its stock, and mobile game developer ME2ON’s shares tripled after its subsidiary introduced a dollar-pegged stablecoin for casino platforms.
Kospi Index Rises 30% YTD, Emerges as Korea’s Leading Market in H1 2025
This rally has propelled South Korea’s Composite Stock Price Index, or KOSPI, upward by almost 30% this year, reaching nearly four-year highs and establishing it as Asia’s best-performing market for the first half of 2025.
Retail investors have heavily participated in this rally, with margin loans outstanding reaching Won20.5 trillion (approximately $15 billion), according to data from the Korea Financial Investment Association.
Despite the market’s excitement, the government has yet to clarify specific policies regarding won-based stablecoins. This situation has led the market to trade on the speculations sparked by President Lee’s appointment of Kim Yong-beom, recognized for his advocacy of digital assets, as his chief policy adviser.
Additionally, a bill introduced by the ruling party this month aims to allow companies with a minimum of Won500 million in equity to issue won-based stablecoins, bolstering market momentum.
However, some critics raise alarms that such measures may expose the financial system to risks from inadequately capitalized entities and could elevate systemic vulnerabilities.
Kakao Pay, Kakao Entertainment, Kakao Corp.
All holding $KAIA. All active in @KaiaChain governance.
Now: a KRW stablecoin trademark filed by Kakao Pay.
Coincidence? pic.twitter.com/5AybAx0zIJ
— Paulo (@auloap) June 24, 2025
South Korea, known for having one of the globe’s most dynamic crypto markets, witnessed trading in dollar-pegged stablecoins reach Won57 trillion in the first quarter alone, intensifying the pressure on the Bank of Korea to expedite its digital currency plans.
Various banks, brokerages, and fintech companies are keen to join the stablecoin sector but are cautious about impending regulatory frameworks.
Bank of Korea Governor Rhee Chang-yong has expressed apprehensions regarding stablecoins issued by non-bank entities, noting the potential dangers to capital flows and monetary policy.
The central bank is preparing to consult with major lenders on a second pilot project for its digital currency.
Korea’s FSC Considers Spot Crypto ETFs
The Financial Services Commission (FSC) of South Korea has put forth a roadmap to the Presidential Committee on Policy Planning, suggesting the approval of spot crypto Exchange-Traded Funds (ETFs).
This proposal follows President Lee Jae-myung’s campaign promise to modernize regulations concerning digital assets and enhance investment opportunities for younger demographics.
The roadmap anticipates implementing measures for spot crypto ETFs and establishing regulatory frameworks for won-based stablecoins in the latter half of 2025.
Historically, the FSC has rejected crypto ETFs due to concerns over volatility and financial risks, asserting that cryptocurrencies are not fitting underlying assets.
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