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Korea Herald
22-05-2025
- Business
- Korea Herald
[Editorial] Korea's crypto gambit
Democratic Party's hasty push for crypto politics must not outpace policy prudence Crypto is crashing the campaign trail. With South Korea's presidential election on June 3 fast approaching, one of the more unlikely issues to seize the spotlight is stablecoins — digital tokens tied to real-world currencies. At the forefront is the main opposition Democratic Party of Korea, which has positioned won-backed stablecoins as a flagship of its digital finance agenda. Advocates argue they will preserve monetary sovereignty and foster innovation. Yet the speed with which this intricate issue has been politicized raises critical concerns — not only about financial technology, but about the maturity of political leadership. The national spotlight on stablecoins sharpened following the first televised presidential debate on May 18. The Democratic Party's nominee, Lee Jae-myung, declared that Korea must 'build a won-based stablecoin market' to avert digital exclusion and protect national assets. Party lawmakers quickly echoed that urgency. Rep. Min Byoung-dug warned that South Korea risks being sidelined by the rise of dollar-backed tokens and called for the development of a domestic alternative to ensure global competitiveness. Rep. Kwon Chil-seung added that such a system could buffer small enterprises against exchange-rate volatility, long a barrier to cross-border capital movement. The argument is, at least in part, compelling. As the United States advances the Genius Act — a legislative effort to formalize dollar-denominated stablecoins — South Korean policymakers are understandably wary of losing ground in a race that could define the future of sovereign finance. For the Democratic Party, stablecoins serve as a digital hedge against the encroaching influence of the dollar in an increasingly dematerialized financial system. From this perspective, inaction looks less like prudence and more like surrender. But enthusiasm has met resistance. Lee Jun-seok, the candidate of the minor conservative New Reform Party, has raised pointed questions about the Democratic Party's readiness. He cited the 2022 collapse of the Terra-Luna project, whose won-pegged stablecoin, KRT, lacked the collateral backing required for price stability. Its dramatic failure erased billions in investor value and left regulators scrambling. 'There's no explanation for collateral, market risks or safeguards against past failures,' Lee cautioned, accusing the Democrats of cloaking risky ideas in techno-utopian language. Indeed, the Democratic Party appears to be charting a path toward stablecoin adoption without a road map for regulation. When pressed in the debate, Lee Jae-myung vaguely assured that a one-to-one reserve ratio would preserve stability — but offered little clarity on how those reserves would be verified, how illicit transactions would be deterred, or which institutions would be accountable. Meanwhile, the Bank of Korea has taken a firm stance: If won-based stablecoins are to enter circulation, the central bank must have direct authority over their approval and oversight. Anything less, it warns, risks eroding the effectiveness of monetary policy, destabilizing the broader financial system and encouraging regulatory arbitrage. The shadow of Terra-Luna still hangs heavy, and the consequences of repeating that mistake could be far-reaching. None of this is to dismiss the utility of tokenized assets. In theory, stablecoins could lower transaction costs, streamline payments and widen access to financial services. But elections are a poor moment to experiment with systems that even central banks approach warily. Political campaigns reward bold ideas, not careful vetting. What South Korea needs now is the latter. The country has already paid once for its crypto exuberance. There is no shame in caution, only in forgetting. Stablecoins may yet have a role to play in South Korea's financial architecture. But that role must be earned, not assumed — and certainly not imposed on the fly, mid-campaign, without a safety net. The danger is not that Korea is too late to the party. It is that it arrives too soon, and with too little preparation.
Mint
26-04-2025
- Business
- Mint
Stablecoins: the real crypto craze
Behind the vaulted arches of Istanbul's Grand Bazaar, above the haggling and the crush, a quieter trade unfolds. In dimly lit corridors, men slip in and out of back rooms, clutching bundles of dollars. Amid the shadows, a trader says that he deals in millions daily, mostly swapped for stablecoins—cryptocurrencies pegged to other assets, usually the greenback. Stablecoins are typically backed by cash or government bonds and run on public blockchains. Unlike bitcoin, the ur-cryptocurrency, their price barely fluctuates: tether, the biggest (whose issuer bears the same name), fetches a flat $1, within a few hundredths of a cent. They are mostly used to trade other cryptocurrencies, providing a stable bridge between wobblier digital assets. According to Chainalysis, a data firm, trading, payments and transfers in stablecoins hit $27.6trn last year, or two-fifths of all value settled on public blockchains, up from a fifth in 2020. In part, this reflects a broader rise in crypto prices over the period—but stablecoins are increasingly used for real-world purposes, too. Migrants send remittances with them, replacing a correspondent-banking system beset by high fees and delays. The Turkish trader says that shopkeepers in the Grand Bazaar pay suppliers with the coins as they are the fastest option. In countries where inflation erodes savings and dollars are scarce, they are catching on as a store of value. A survey of stablecoin-holders in Turkey and four other emerging markets by Castle Island Ventures, which invests in crypto startups, and Visa, a payments giant, finds that nearly half use them for this purpose. As stablecoins have gained real-world traction, notes Bernstein, a broker, their market capitalisation has decoupled from that of cryptocurrencies more broadly (see chart). America, where stablecoins are central to crypto trading, remains the world's biggest market, according to Chainalysis. Relative to economic size, though, Turkey is now the home of stablecoin transactions: in the year to March 2024 purchases alone were worth 4.3% of GDP. In the year to June, Ethiopia saw the fastest growth—almost a tripling—in transactions of less than $10,000, most of which were probably remittances and everyday payments. Tether, the dominant stablecoin, accounts for 70% of activity. Tether, the company, makes money by investing its reserves. It says it has $113bn, or 72% of its assets, in mostly short-duration Treasuries, which rising yields have turned into a cash cow. But dominance brings risks. A loss of confidence in tether could shake the market, as the fall of Terra-Luna, an algorithmic stablecoin system, did in 2022. If Tether was forced to fire-sell its Treasuries and other holdings, that could also have consequences for mainstream financial markets. Tether insists its model is secure. It has proved resilient: during the Terra-Luna collapse, the firm made more than $10bn in redemptions in a fortnight while maintaining its peg to the dollar. Yet Tether's opacity means that future difficulties cannot be ruled out, says Rajeev Bamra of Moody's, a rating agency. Unlike Circle, its main rival, Tether does not undergo independent audits, making it hard to know whether its assets—which besides Treasuries include riskier things, such as bitcoin—match its liabilities. Nor does it disclose where its reserves are held. S&P, another rating agency, assigns tether a risk rating (in terms of its ability to keep its dollar peg) of four out of five. Circle's USDC gets a two. Many governments are becoming stricter. In January European exchanges delisted tether for failing to comply with new EU laws. Paolo Ardoino, Tether's boss, is critical of the rules, especially a requirement that stablecoins must hold 60% of reserves in bank deposits. 'If a bank fails, the stablecoin fails with it," he argues. Still, he says, emerging markets are his real focus. Yet their governments are growing uneasy, too. Tether is registered in El Salvador, whose president, Nayib Bukele, is eager to make his country a hub for digital assets. Before that, it was based in the British Virgin Islands. Neither place is noted for over-intrusive regulation. In 2023 a study by TRM Labs, a blockchain-intelligence company, found that a relatively high share of tether transactions were part of criminal activity. Iran and Russia have used the coin to evade sanctions. A UN report called it the 'preferred choice" for South-East Asian money-launderers. Tether says that it works closely with law enforcement, freezing wallets linked to illicit activity and complying with official requests. On February 25th Turkey began to require crypto exchanges to be licensed, enforce anti-money-laundering controls and verify users' identities. Platforms such as Binance and KuCoin have scaled back their presence in the country in response. In Nigeria stablecoin volumes fell by 38% in the year to July after authorities revoked the licences of over 4,000 exchanges, blaming them for the naira's decline. At the same time, America may move in a different direction. In January Donald Trump signed an order directing officials to draft a regulatory framework for digital assets within six months. He declared that America would be 'the crypto capital of the planet". The order backed 'lawful and legitimate dollar-backed stablecoins" to bolster the greenback's dominance among conventional currencies. Oversight is not all bad for stablecoins, facilitating interest from mainstream finance. Stripe, a payments firm, has bought Bridge, a stablecoin-infrastructure startup. Visa has built a platform to help lenders issue coins; BBVA, Spain's second-largest bank, will be among the first to use it, perhaps for money transfers. Stablecoins have shown their value in the backrooms of the Grand Bazaar. Their next task is to do so in the regulators' offices and boardrooms of Washington and Wall Street. For more expert analysis of the biggest stories in economics,finance and markets, sign up to Money Talks , our weekly subscriber-only newsletter. © 2025, The Economist Newspaper Limited. All rights reserved. From The Economist, published under licence. The original content can be found on
Yahoo
02-03-2025
- Business
- Yahoo
A $113 Billion Market That Prints Cash? How Stablecoins Became Wall Street's Next Obsession
Stablecoins have emerged as a force in global finance, with transaction volumes reaching $27.6 trillion last year and mainstream financial institutions increasingly drawn to their potential, The Economist reported Monday. Tether, the market leader holding $113 billion in assets, now controls 70% of a rapidly expanding ecosystem that's moving beyond cryptocurrency trading into everyday payments, remittances, and wealth preservation in inflation-prone economies. In Istanbul's Grand Bazaar, traders deal millions of dollars daily, mostly exchanged for stablecoins. Unlike volatile cryptocurrencies like Bitcoin, stablecoins maintain a steady value pegged to traditional currencies, typically the U.S. dollar, and are backed by reserves of cash and government bonds. Don't Miss: Deloitte's fastest-growing software company partners with Amazon, Walmart & Target – Maker of the $60,000 foldable home has 3 factory buildings, 600+ houses built, and big plans to solve housing — The market has evolved, with stablecoin activity accounting for two-fifths of all transactions on public blockchains in 2023, up from just one-fifth in 2020. According to data cited by The Economist, their utility extends well beyond crypto trading. Turkey has become the world's largest stablecoin market relative to economic size, with purchases alone worth 4.3% of GDP in the year ended March 2024. Nearly half of stablecoin users in emerging markets are using them as a store of value, according to a joint survey by Castle Island Ventures and Visa (NYSE:V) across five countries including Turkey. Trending: Bernstein, a broker, said that stablecoins' market capitalization has increasingly decoupled from broader cryptocurrency trends as they gain real-world adoption. The separation is a shift in how digital assets function in global markets. Tether generates substantial revenue by investing its reserves, with 72% of its assets currently held in U.S. Treasury bonds. Rising yields have transformed this strategy into a lucrative income stream. However, its dominant position raises systemic concerns. Financial experts warn that a loss of confidence in Tether could trigger market instability similar to the 2022 collapse of Terra-Luna, an algorithmic stablecoin system. Rajeev Bamra, Moody's Head of Strategy, Digital Economy told The Economist that Tether's lack of transparency compounds the responses vary globally. European exchanges delisted Tether in January for non-compliance with new EU regulations. Tether CEO Paolo Ardoino criticized the rules, particularly requirements to hold 60% of reserves in bank deposits, saying that 'if a bank fails, the stablecoin fails with it.' The U.S. appears to be moving in the opposite direction. President Donald Trump signed an executive order in January directing officials to create a regulatory framework for digital assets within six months, declaring America would become 'the crypto capital of the planet' and supporting 'lawful and legitimate dollar-backed stablecoins' to strengthen the dollar's global position. Read Next: 'Scrolling To UBI' — Deloitte's #1 fastest-growing software company allows users to earn money on their phones. If there was a new fund backed by Jeff Bezos offering a ? Up Next: Transform your trading with Benzinga Edge's one-of-a-kind market trade ideas and tools. Click now to access unique insights that can set you ahead in today's competitive market. Get the latest stock analysis from Benzinga? VISA (V): Free Stock Analysis Report This article A $113 Billion Market That Prints Cash? How Stablecoins Became Wall Street's Next Obsession originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved. Sign in to access your portfolio
