JD.com forays into stablecoins as South Korea voices concern
JD.com (NASDAQ: JD), China's largest retailer by revenue, is venturing into the stablecoin arena, and it has international ambition.
In a recent media briefing, chairman and founder Richard Liu Qiangdong stated that he believes stablecoins will dominate the cross-border transfer market, and his company wants a piece of the pie.
'JD.com intends to secure stablecoin licenses across key currency markets globally…to reduce cross-border transaction costs by 90 per cent and improve the efficiency to within ten seconds,' he stated, as reported by the South China Morning Post.
Liu pointed out that today's cross-border payments, which rely on SWIFT, remain slow and expensive, owing to the inefficiency of the banking system and the high number of intermediaries. A SWIFT transfer can take anywhere from a day to five, depending on the corridor and currencies. In contrast, a stablecoin transaction takes seconds and costs a fraction of the legacy fees.
'We hope that JD stablecoin will become a universal payment method worldwide,' Liu says.
Liu's endorsement comes after months of stablecoin efforts by JD.com's Hong Kong-based subsidiary, JINGDONG Coinlink Technology. The firm is part of the city's stablecoin sandbox, which the Hong Kong Monetary Authority (HKMA) launched earlier this year.
In a recent interview, Coinlink CEO Liu Peng revealed that the company completed the second phase of its stablecoin pilot in Hong Kong a month ago. While the pilot targeted cross-border settlements, it also experimented with retail payments and investments.
Peng added that the company expects to acquire a license in Hong Kong under the city's new stablecoin regime later this year and launch its new HKD-backed stablecoin over the next six months.
JD.com joins dozens of other global firms targeting stablecoin launches over the next few years as the industry becomes one of the most lucrative in the sector. Circle's recent initial public offering (IPO) (and the subsequent 750% spike in stock value) proved that the market is ready for a stablecoin implosion, and other companies are scrambling for a share of the spoils.
In Asia, Alibaba (NASDAQ: BABAF), which owns JD.com's biggest rival, Tmall, has announced similar plans and is also pursuing a Hong Kong license. Beyond Asia, giants like Walmart (NASDAQ: WMT), Amazon (NASDAQ: AMZN), and JPMorgan (NASDAQ: JPM) are also working on their own stablecoins.
Stablecoins have been on the radar of these giants for years. However, according to market experts, they had refrained from the sector as it was largely unregulated.
'The infrastructure has been ready, but it lacked application scenarios. The reason institutions were previously hesitant to use stablecoins was that these were not compliant,' says OKG Research's senior analyst Jason Jiang. Not anymore. The United States is edging closer to welcoming the GENIUS Act; Singapore has finalized its stablecoin framework; and Hong Kong's Stablecoin Ordinance takes effect in August.
Bo Tang, a director at Hong Kong's University of Science and Technology, adds that these regulations are laying the foundation for a new financial order.
'A brand-new payment ecosystem built on stablecoins will emerge.'
Bank of Korea: Stablecoins could threaten financial stability
Elsewhere, the Bank of Korea (BOK) says it's not against won-backed stablecoins, but it's concerned about their impact on financial stability and foreign exchange.
Governor Rhee Chang-yong said that won-backed stablecoins could solve the rise of USD alternatives, which dominate the market. According to the Atlantic Council, USD stablecoins account for 98% of daily transacted value.
However, the central bank is concerned that Koreans could use the won stablecoins to acquire dollar alternatives, which 'in turn could increase demand for dollar stablecoin and make it difficult for us to manage forex,' he stated.
The governor's concerns come as the government, led by the new president, Lee Jae-myung, pushes for stablecoin adoption. Lee campaigned on a pro-digital asset stance, pledging to make South Korea a Bitcoin hub, and stablecoins are central to this agenda.
In a separate media briefing, Deputy Governor Ryoo Sangdai proposed a gradual rollout that only allows regulated financial institutions to issue stablecoins initially.
'It would be desirable to initially allow stablecoin issuance primarily through banks, which are subject to higher levels of financial regulation, and gradually expand it to the non-banking sector,' he stated, as reported by Yonhap News.
This proposal would favor local banks, and some are already bracing to venture into the sector. The country's largest lender, KB Kookmin, filed 17 trademark applications this week, all related to stablecoins. KakaoPay, which operates the leading mobile payments service, has also filed similar trademark applications.
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