30th June 2025 – (Seoul) South Korea’s stock market has experienced a surge driven by a fervour among investors for won-based digital currencies this month, spurred by the commitment of newly elected President Lee Jae-myung to permit crypto assets tied to the national currency. Shares of companies associated with the Bank of Korea’s digital currency initiative, such as Kakao Pay and LG CNS, have witnessed substantial fluctuations. Kakao Pay shares soared over 100% this month, while LG CNS climbed nearly 70%, before undergoing some corrections this week due to profit-taking.
On the Kosdaq junior market, Aton, a fintech security firm, saw its stock price surge by 80%, and ME2ON, a mobile game developer, tripled in value. ME2ON’s subsidiary recently launched a stablecoin pegged to the dollar for use in casino games.
The retail investor frenzy surrounding the anticipated launch of won-based stablecoins, coupled with optimism regarding shareholder-friendly policies under the new administration, has propelled the benchmark Kospi Composite index by almost 30% this year to reach a nearly four-year peak. Consequently, South Korea has emerged as the top-performing market in Asia during the first half of the year.
This market upswing has emboldened retail investors to amplify their leverage in pursuit of profits, with outstanding margin loans escalating to Won20.5tn ($15bn), as per data from the Korea Financial Investment Association.
Despite the government not yet unveiling specifics of its cryptocurrency regulations, stocks perceived as potential beneficiaries of won-based stablecoins continue to be in high demand. Anticipation has been fuelled by the appointment of Kim Yong-beom, a proponent of digital tokens, as the president’s chief policy adviser, and by a parliamentary bill proposed by the ruling party to bolster the country’s digital asset sector.
The bill is set to enable companies with a mere Won500mn in equity capital to issue won-based stablecoins, a move that critics fear could invite undercapitalised entities and pose systemic risks.
South Korea stands as one of the world’s most vibrant crypto markets, with approximately one-fifth of its population engaging in digital asset trading. Trading of U.S. dollar-pegged stablecoins in the country reached Won57tn in the first quarter of the year, prompting pressure on the Bank of Korea to hasten preparations for its digital currency launch.
While financial institutions and fintech firms are eager to enter the space, decisions on the issuers and timing remain pending government deliberations.
“We are eager to engage in this sector, but we are closely monitoring regulatory boundaries set by the government,” stated a fintech industry executive.
Bank of Korea governor Rhee Chang-yong has expressed reservations regarding non-bank entities issuing won-pegged stablecoins, citing potential impacts on capital flows and monetary policy efficacy. The central bank is contemplating a second pilot test of its digital currency in consultation with major commercial banks.
However, market analysts caution that certain stocks, buoyed by the digital tokens craze, may be overestimated based on their fundamentals. They advise investors to exercise caution due to the shares’ volatility.