Stablecoins Evolve into Financial Infrastructure

Anchorage Digital operates prime services, including cryptocurrency-related services such as staking and governance. In addition, it provides digital asset financial infrastructure for other financial institutions.

Moses Lee, APAC Head at Anchorage Digital, operates digital asset infrastructure for financial institutions along with prime services.

Jin Dong-wook, APAC Stablecoin Director at Anchorage Digital, categorized the stablecoin business unit's role into three main areas, prioritizing stablecoin issuance partnerships.

The company supports businesses in issuing their own stablecoins and developing regulatory compliance capabilities, and helps Asian financial institutions enhance payment efficiency and capital effectiveness using US dollar-based stablecoins. Additionally, it contributes to shaping the regulatory environment by collaborating with regulatory authorities, promoting joint pilot designs, and submitting opinions on consultation papers.

With the passage of related legislation in the US, the regulatory scope of stablecoins is expanding, and strategic clarity is expected to increase with rule-making early next year and the enforcement of the law in 2028.

Changes in the regulatory environment, such as the Genius Act, have supported this shift in perception.

These changes are expected to further enhance strategic clarity with the completion of rule-making early next year and the implementation of the law in 2028.

By adopting an automated federal banking structure that manages private keys without human intervention, it combines regulatory compliance with technical security.

This shortens asset access time to mere seconds, enabling institutional investors to respond quickly to rapidly changing market conditions and reduce market risk.

Operational risks are eliminated by managing private keys with technology that requires no human intervention, and a federal banking structure ensures both regulatory compliance and technical security.

The technology involves moving transaction requests generated while connected to the internet into a closed airlock, then performing the signature without being connected to the private key, and isolating it again.

Transaction requests generated while connected to the internet are moved to a closed airlock, where signatures are performed without connection to the internet or private keys. This method focuses on technically resolving accessibility while preventing security incidents.

It ensures compliance with standards through rules and audit procedures established by regulatory authorities, creating a stable asset management environment for institutional investors based on the entire financial system.

This is because rules established by regulatory authorities, along with regular inspections and audit procedures, ensure that all participants operate according to specific standards. Institutional investors can secure stability by managing assets within this regulatory framework.

Jin Dong-wook, APAC Stablecoin Director, diagnosed that despite the stablecoin market growing to $300 billion, it remains in the early stages of transition.

Stablecoins are innovative financial tools with 24/7 mobility, fast settlement, and programmable features.

Historically used primarily for inter-exchange trading, they are now evolving for various institutional uses such as payments, remittances, and liquidity management, entering a phase where institutions are beginning to build stablecoin-based services.

The key to this change is the clarity of regulation secured by the introduction of the US Federal Reserve's proposed rule.

Institutions find it difficult to actively move in the market until rules or regulations are clear, and regulatory clarity encourages active market participation by institutions. This provides trust to customers through 1:1 full collateralization and regular proof of reserves, and for banks, it facilitates the approval of stablecoin utilization.

Moses Lee explained that for most banks to place public blockchain assets on their balance sheets in accordance with BIS guidelines, securing capital is essential.

This burden of capital costs acts as a hindrance, slowing the spread of stablecoins within the banking system. Currently, many banks are simultaneously preparing stablecoin and Deposit Token services, adjusting their issuance pace.

Stablecoins are managed by dividing roles between brand companies, which secure customer networks and use cases, and issuing banks, which handle licensing and reserve asset management.

Brand companies secure customer networks and use cases, while issuing banks are responsible for license management, reserve asset custody and operation, compliance, and regulatory response. Under the US system, stablecoin issuers must perform the crucial tasks of regulatory compliance and reserve asset custody and operation.

Jin emphasized that strengthening connectivity with the existing financial system must be based on compliance reviews and adherence to capital regulations.

Confidence in redemption must be secured through the quality, transparency, and regulatory oversight of reserve assets, and connectivity with existing systems includes compliance reviews, accounting treatment, capital regulations, and payment linkage. Currently, differences in regulatory approaches between countries and fragmentation between blockchains act as practical obstacles.

Director Jin Dong-wook expressed that Korean institutions are struggling to find ways to utilize dollar stablecoins amidst uncertain legal frameworks.

Due to a lack of legislation, even with custody, issuance, operation, and compliance capabilities, proactive measures are difficult due to concerns about being bound by new laws. This situation shows deliberation, hoping for the establishment of a legal framework but lacking specific confirmed plans.

Given Korea's trade-dependent economic structure, there is a continuous influx of inquiries seeking specific guidelines for safe receipt, holding, and redemption of dollar stablecoins.

Anchorage Digital's mission is to improve the accessibility of blockchain infrastructure and disseminate efficient formats so that companies can access it beautifully and easily. Stablecoins are expected to play a key role in the process of reshaping financial infrastructure between countries.

Money has steadily evolved from bartering to digitalization. Jin Dong-wook, APAC Stablecoin Director, highly valued stablecoins as an extension of currency evolution, seeing them as optimized for automated environments like AI payments.

Within the historical flow of currency from bartering to coins, banknotes, and digitalization, stablecoins are assessed as a further stage in the evolution of money, being programmable and optimized for automated environments like Artificial Intelligence (AI) payments.