As global financial firms move to issue stablecoins, domestic financial authorities have also announced the opening of the tokenized securities market, anticipating market diversification.
These financial firms have reached a consensus on establishing a corporation for joint stablecoin issuance, indicating an acceleration in the adoption of blockchain-based digital assets in the global financial market.
The corporation for joint stablecoin issuance is scheduled to be established in the second half of this year. Initially, dollar stablecoins will be issued, targeting the first half of next year. Subsequently, the plan is to gradually expand stablecoin issuance to the currencies of G7 countries.
If deposits were to shift to major stablecoins, banks would not only face concerns about fund withdrawals but also miss out on the reserve management revenue earned by issuers like USDT or USDC. This could represent a significant opportunity cost for banks.
A major challenge to be addressed regarding joint stablecoin issuance is the method of distributing reserve management profits. This issue can be very sensitive among participating financial firms. Furthermore, the equity structure and governance system of the corporation also remain areas that need to be clearly established.
They are also exploring ways to utilize stablecoins as a countermeasure against the decline in existing correspondent banking revenue. Instead of simply opposing legislation, there is a strong desire to gain a first-mover advantage by establishing a joint distribution network.
They issue stablecoins and then attract funds by converting these stablecoins into deposit tokens when customers holding them come to the bank. This method is part of a strategy to attract global funds into US bank deposit tokens, thereby expanding dollar deposits.
Citizens in emerging countries have a strong preference for dollar deposits due to concerns about the depreciation of their local currencies. Leveraging this demand, a strategy is underway to safely attract funds from emerging countries into dollar deposits through deposit tokenization.
In a market where deposit tokens and stablecoin layers are separated, existing crypto firms like Circle face limitations in handling comprehensive banking operations due to restrictions on their banking licenses. In particular, their operations are often through trust bank licenses, which present clear limits. In contrast, Wall Street firms are emerging as the sole entities capable of issuing such deposit tokens and performing related tasks. This can be interpreted as a move by a Wall Street-centric consortium to regain dominance in the virtual asset market.
The diversification of the stablecoin market is expected to have a positive impact on users. As the market expands and the scope for each stablecoin's utilization widens, users will benefit from a broader range of choices. The existing exchange-centric market is expected to become more segmented and specialized, grouping into areas such as fintech, payments, and institutional financial markets.
Companies like Alpaca play a crucial role in connecting traditional markets with on-chain markets. They provide API-based securities services, enabling actual stock execution and clearing. Such services form an important foundation for securities firms' super-app strategies and open up possibilities for each company to offer differentiated services.
The Hyperliquid API simplifies various market connection issues. It is considered one of the easiest ways to secure liquidity, which could potentially pose a threat to large existing exchanges like Binance.
The market structure will likely change depending on which company gains market leadership. Robinhood, unlike Binance, is proactively securing regulatory licenses in the European market and focusing on tokenization of unlisted stocks. Binance, on the other hand, continues its efforts to expand trading volume, including launching its own option products.
As the initial 10 participating financial institutions have now grown to 21, the door is open for Korean companies to join. Especially with the Financial Services Commission's announcement today regarding tokenized securities, the domestic market is expected to expand further next year.
Stablecoin issuance is likely to proceed sequentially, starting with currencies that have large market sizes and relatively well-established regulatory environments, such as the Euro and Pound. Conversely, stablecoin issuance for countries that have adopted Central Bank Digital Currencies (CBDCs) may be prioritized later. This could provide an opportunity for the Korean market to secure time for institutional arrangements and market response.
As institutional arrangements related to stablecoins are underway in Korea, it is important to closely monitor the trends regarding tokenized securities announced by the Financial Services Commission and market movements.
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