The Korean wave drives the Korean won stablecoin: lawmakers suggest that BTS fan clubs accept stablecoin payments.

Author: Lee Yeon-woo, Korea Times

Compiled by: Felix, PANews

As the momentum for the launch of stablecoins denominated in Korean won continues to grow, skepticism is also rising rapidly. Some question whether the Korean won stablecoin can find a competitive advantage in the face of dollar-dominated stablecoins.

A proposed use case supported by a legislator from the Democratic Party of Korea (DPK) and some industry officials is in transactions related to Korean pop music.

They suggested that K-pop (Korean Pop) platforms adopt a stablecoin backed by the Korean won, so that global fans can more easily shop or purchase concert tickets.

South Korean Congressman Min Byoung-dug stated at an economic policy seminar organized by the Democratic Party: "If stablecoins denominated in US dollars flood the market, the Korean won may be pushed out of circulation."

"To protect part of the payment ecosystem, we should allow globally influential content and platforms (such as BTS and Galaxy smartphones) to conduct transactions using stablecoins pegged to the Korean won."

Stablecoins are a type of cryptocurrency that is pegged to real-world assets such as fiat currencies or government bonds, aiming to minimize volatility. They enable instant, round-the-clock transfers with very low transaction fees. No intermediaries like banks or credit card companies are needed. Stablecoins are particularly useful for cross-border transactions and withdrawals.

The potential applications of stablecoins are expected to further expand, especially after the United States formally incorporates stablecoins into its regulatory framework through the "Genius Act" bill.

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 exchanges that typically occur when accessing Korean content."

Rosé, a member of the South Korean pop music group BLACKPINK, performed at the main stadium of the Incheon Asian Games.

International K-pop fans also recognize the flaws in the current payment system. They told the Korea Times that some websites and applications do not accept foreign-issued bank cards—especially those services that require identity verification. Additionally, the payment system often crashes during high traffic periods (such as concert ticket sales).

If a stablecoin system is adopted, fans can purchase stablecoins denominated in Korean won through cryptocurrency exchanges and directly send them to their purchase accounts, thereby completing transactions more efficiently.

The benefits for suppliers are very clear. Once this system is widely adopted, it can save on foreign exchange fees and high transaction fees previously paid to networks like Visa, enhancing profitability.

In addition, there is potential for extra revenue. Imagine if SMTOWN (Note: the collective name for all artists under S.M. Entertainment, the largest entertainment agency in Korea) launched its own stablecoin—like SMKRW—and used it to sell merchandise directly to fans. The company could earn interest from the funds preloaded in users' wallets, similar to how Starbucks does with its gift cards.

But for consumers, this incentive may not be strong enough—unless certain products are sold exclusively through stablecoins backed by the Korean won.

Current payment systems can sometimes be frustrating, but they are not unusable. Global popular platforms like Weverse have introduced various international payment methods.

In addition, although financial professionals often forget, a large portion of the public is still unfamiliar with cryptocurrencies. If the introduction is not done properly, stablecoin systems may ultimately appear more cumbersome than the traditional payment methods they aim to replace.

Ryan Yoon, a senior research analyst at Tiger Research, stated: "The core advantage of stablecoins lies in their ability to eliminate unnecessary intermediaries in the financial system. The key factor is to ensure that consumers do not have to manually convert to stablecoins, allowing this process to be seamless and not impacting user experience."

On July 1, in the streets near Red Square in Moscow, teenagers practiced K-pop dance.

Although some international K-pop fans expressed interest in the idea of changing the payment experience, others indicated hesitation. Most stated that they had never heard of stablecoins before.

A fan from the Philippines likened this initiative to the previous craze of NFT projects in the Korean pop music industry, which ultimately failed to achieve success. "They think K-pop fans are easy to market to, but we are more selective."

Another fan questioned whether policymakers truly understand the fan experience. "The government should abandon the idea that 'as long as it's built well, fans will participate.'" "We can't help but ask whether the decision-makers themselves have ever bought tickets to a K-pop concert."

Regardless of whether it is liked or not, this is still just an idea for now. The Korean Democratic Party has begun to push for legislation to formally establish a stablecoin framework based on the Korean won, but specific guidelines have yet to be determined.

Jay Jo, a senior research analyst at Tiger Research, stated: "Currencies limited to a single industry, rather than being widely applied across various sectors, are unlikely to achieve economies of scale. It is important to consider the tangible benefits that a won-supported stablecoin can bring to the South Korean economy, rather than focusing solely on a single use case."

Related Reading: The competition for the Korean won stablecoin has officially begun: bank alliances, tech giants, and Web3 companies are all entering the fray. Who will lead the way first?