The South Korean stock market is showing significant growth following President Lee Jae-myung’s promise to allow cryptocurrency assets backed by the won. This initiative is driving increasing interest among retail investors, especially in companies linked to digital currency projects.
Growth of Stock Market in South Korea
Recent data indicate that the Kospi Composite index in South Korea has surged nearly 30% this year, making the country the leader in growth among Asian markets. Stocks associated with the Bank of Korea’s digital currency initiatives have exhibited high volatility. For instance, LG CNS shares rose by 70% in June but later retreated as investors began to take profits. Meanwhile, Kakao Pay shares doubled.
Speculative Movements in Fintech Sector
Kosdaq-listed companies have also seen significant changes tied to stablecoins. For example, shares of the fintech company Aton jumped by 80%, while the mobile game developer ME2ON tripled after its subsidiary launched a dollar-pegged stablecoin for casino applications. This sparked strong interest from retail investors and led to outstanding margin loans totaling Won20.5 trillion ($15 billion), according to Korea Financial Investment Association data.
Regulatory Expectations and the Future of Stablecoins
Expectations for the legalization of cryptocurrencies were heightened following the appointment of Kim Yong-beom, a digital token advocate, as chief policy adviser. A parliamentary bill proposed this month would allow companies with Won500 million in equity capital to issue won-based stablecoins. South Korea is one of the world’s most active countries in cryptocurrency, with approximately 20% of the population trading digital assets. However, despite strong interest from banks and fintech companies in stablecoin issuance, the government has yet to determine licensing requirements and timelines.
The future of the cryptocurrency market in South Korea appears quite positive, considering the active interest from investors and the government's intent to develop digital currency. However, uncertainty in the regulatory environment continues to raise questions about how new initiatives will operate and what implications they may have for the economy.
