SEOUL (Realist English). South Korea’s stock market has soared this month, fuelled by retail investor excitement over the potential introduction of won-based stablecoins, following newly elected President Lee Jae-myung’s pledge to support crypto assets tied to the national currency.
Shares in companies linked to the Bank of Korea’s digital currency project — including Kakao Pay and LG CNS — have led the rally. Kakao Pay more than doubled in June, while LG CNS jumped nearly 70% before retreating on profit-taking. Smaller firms have also surged: fintech security group Aton rose 80%, and mobile game producer ME2ON tripled after its subsidiary launched a dollar-pegged stablecoin for casino gaming.
The speculation comes despite the government not yet detailing its crypto policies. Still, Lee’s appointment of Kim Yong-beom, a digital token advocate, as policy chief, and a ruling party bill to boost the digital asset sector, have fuelled expectations.
The rally has lifted the Kospi Composite index by almost 30% this year to a near four-year high, making it Asia’s top-performing market in the first half of 2025. Meanwhile, margin loans by retail investors have surged to ₩20.5tn ($15bn).
The proposed bill would allow companies with as little as ₩500mn in equity to issue won-based stablecoins — a move critics say could encourage undercapitalised players and heighten systemic risks.
Analysts warn some stock valuations are overstretched. “Won-pegged stablecoins are likely to be introduced, but how much that will help boost corporate earnings is questionable,” said Hwang Sei-woon, of the Korea Capital Market Institute.
Bank of Korea governor Rhee Chang-yong has also cautioned against allowing non-bank issuers to dominate stablecoin markets, citing risks to capital flows and monetary policy.
Despite soaring enthusiasm, experts say investors should remain cautious amid regulatory uncertainty and potential overvaluation in the sector.
