Market News

South Korea's KakaoPay Faces 17% Plunge Amid Stablecoin Concerns, Bloomberg Reports

South Korean fintech giant KakaoPay experienced a significant 17% decline in its stock price as trading resumed on June 27.

This plunge follows the Korea Exchange suspending trading for the second time in a week due to rising skepticism regarding won-pegged stablecoins.

According to Bloomberg, regulators labeled KakaoPay as an "investment risk" amid concerns over extreme market volatility.

The recent selloff contrasts sharply with the stock's previous threefold increase, driven by optimistic views on South Korea's digital asset regulatory changes.

Market enthusiasm was ignited by a proposal from the Democratic Party to allow local companies to issue stablecoins pegged to the Korean won.

KakaoPay has filed 18 trademark applications in relation to digital currency services, indicating its ambition to be a key player in the emerging stablecoin market.

However, growing caution among companies is evident following Bank of Korea Governor Lee Chang-yong's warnings about the risks associated with stablecoins.

The central bank remains skeptical about domestic stablecoins, fearing they could increase demand for dollar-denominated alternatives.

Globally, regulators are grappling with the challenges of overseeing stablecoins, as evident with recent actions in Hong Kong and the U.S.

Despite the uncertainties, institutional adoption of stablecoin infrastructure continues to grow, with companies like Shopify integrating stablecoin payments into their operations.