A digital financial layout aiming for dominance in the Korean won stablecoin

South Korean internet giant Naver's planned acquisition of Dunamu, the parent company of Upbit, South Korea's largest cryptocurrency exchange, can be seen as a strategic move to dominate the Korean won stablecoin. This transaction not only represents a deep integration of South Korea's tech and crypto industries, but also reflects South Korea's ambition to assert monetary sovereignty in the global digital financial competition. 1. Core of the Transaction: Equity Swap and Stablecoin Binding According to the latest news, Naver Financial, Naver's fintech subsidiary, and Dunamu have reached a comprehensive equity swap agreement. This agreement will see Dunamu shareholders receive shares through the issuance of new shares, ultimately achieving the goal of making Dunamu a wholly-owned subsidiary of Naver Financial. This transaction is not simply a capital expansion, but is deeply integrated with the stablecoin business:

• Technology and Traffic Integration

  : As the world's fourth-largest crypto exchange, Upbit processed over 50% of South Korea's cryptocurrency trading volume in the first quarter of 2025. Its user base complements Naver's coverage of shopping, payment, and other life scenarios. For example, Naver Pay's annual payment volume reaches 8 trillion won. By integrating Upbit's trading functions, stablecoins can be directly embedded in high-frequency scenarios such as e-commerce settlement and cross-border remittances. Stablecoin First-Mover Advantage: The two parties announced their collaboration to develop a Korean won stablecoin as early as July 2025, and this acquisition further solidifies this plan. Naver plans to collaborate with Upbit to launch a stablecoin backed by Korean won reserves and explore overseas markets. Data from the Bank of Korea shows that stablecoin outflows from South Korean crypto exchanges reached $19.5 billion in the first quarter of 2025, of which US dollar stablecoins accounted for over 80%. The lack of a domestic stablecoin has increased the risk of capital outflow. Naver's move aims to seize the initiative in issuing a Korean won stablecoin by controlling the traffic flow to exchanges.

II. Policy-driven: Compliance game under the regulatory framework

The South Korean government's regulatory attitude towards stablecoins has shifted from cautious to positive, providing a policy window for Naver's layout:

• Legislative breakthrough

  : In June 2025, South Korea's ruling party proposed a draft of the "Basic Law on Digital Assets", allowing non-bank institutions to issue stablecoins, and the minimum registered capital was reduced to 5 The bill, which requires a 1:1 reserve custody system, will be worth 100 billion won. If passed, South Korea will become the first major economy in Asia to allow non-bank stablecoin issuance. As a tech giant with strong regulatory compliance, Naver is expected to be among the first companies to receive a license. Regulatory Coordination: South Korea's Financial Services Commission (FSC) plans to submit detailed stablecoin regulations in October 2025, clarifying requirements such as issuer qualifications and reserve audits. Naver has already acquired a 70% stake in Upbit's securities platform, preemptively laying out compliance infrastructure, such as introducing third-party custody and establishing a real-time reserve verification system, to meet regulatory requirements. Central Bank Softens Stance: Although the Bank of Korea (BOK) was previously concerned about the impact of stablecoins on monetary policy, it has recently expressed a more cooperative stance. The central bank participated in a BIS-led cross-border settlement project and tacitly approved the prioritization of stablecoin pilots, providing implicit support for Naver's stablecoin project.

III. Competitive Landscape: The Battle Between Giants Like Kakao

The South Korean stablecoin market is characterized by multi-giant competition, with the battle between Naver and Kakao being particularly fierce:

• Kakao's Layout

  : Kakao Pay has applied for multiple patents for a Korean won stablecoin and is collaborating with the public blockchain project Kaia, planning to promote the stablecoin through the 200 million users of the social platform LINE. Its stock price soared 208% on the expectation that the stablecoin will be used in 2025, demonstrating market optimism. Naver's Differentiated Advantages: Unlike Kakao, which relies on a social ecosystem, Naver, through its integration with Upbit's exchange resources, can directly reach over 16.2 million crypto users in South Korea. Furthermore, Naver's traffic portals in search engines, e-commerce, and other sectors can provide a wider range of application scenarios for stablecoins. For example, users can pay directly with stablecoins when shopping on Naver, eliminating the need to convert traditional currencies and reducing transaction costs. The Challenge of Banking Alliances: Eight major South Korean banks (including Kookmin Bank and Shinhan Bank) plan to establish a joint venture to issue a stablecoin, which may receive priority regulatory approval. This poses a potential threat to Naver, but the closed "payment + transaction" loop it created through its Upbit acquisition still provides a competitive barrier.

  Fourth: Risks and Uncertainties

  Despite a clear strategy, Naver's stablecoin plan faces multiple challenges:

  • Regulatory Delays

    South Korea's stablecoin legislation process is lengthy, with government proposals taking an average of 435 days to pass and lawmakers' proposals taking 657 days. If the Digital Asset Basic Law fails to take effect before 2027 as expected, Naver's plans could be hindered. Reserve Asset Challenges: A Korean won stablecoin requires 1:1 reserve backing, but South Korea's short-term government bond market is only approximately $7 billion, far less than the hundreds of billions of dollars in reserves held by dollar-denominated stablecoins. Naver may be forced to rely on alternative assets like currency-stable bonds, but their low yields (around 2%) weaken its incentive to issue. Technical and Compliance Risks: Stablecoins must address issues such as smart contract vulnerabilities and poor reserve management. For example, USDC briefly devalued due to the Silicon Valley Bank incident, necessitating Naver establish a rigorous risk management system. Furthermore, South Korean regulators restrict stablecoin trading to users with real-name authentication, potentially impacting user growth. 5. Global Perspective: The Struggle for Digital Financial Sovereignty Naver's acquisition plan epitomizes South Korea's participation in the global stablecoin race: De-dollarization Strategy: The South Korean government hopes to reduce its reliance on US dollar stablecoins through a won-denominated stablecoin. In the first quarter of 2025, US dollar-denominated stablecoin trading volume on South Korean crypto exchanges reached 57 trillion won, accounting for over 80%. This structure exacerbates the difficulty of monetary policy regulation. If Naver's stablecoin is successful, it will provide South Korea with new tools in areas such as cross-border trade and foreign exchange reserve management. Benchmarking the US Regulatory Framework: The US Stablecoin Regulation Act requires issuers to hold hard currency reserves and be subject to federal oversight, a model South Korea is adopting. Naver's compliance strategies (such as adopting BlackRock-style custody) demonstrate its intention to align with international standards, paving the way for future overseas market expansion. East Asian Competition: Japan is promoting yen stablecoins through projects like JPYC, while Hong Kong, China, is attracting businesses through the Stablecoin Ordinance. If South Korea can establish a comprehensive won stablecoin ecosystem by 2027, it has the potential to gain a foothold in East Asia's digital finance competition. Conclusion Naver's acquisition of Upbit is fundamentally about building a digital financial ecosystem centered around the Korean won stablecoin by integrating exchange traffic, payment scenarios, and policy resources. This strategy aligns with the South Korean government's policy of de-dollarization and meets market demand for efficient and compliant stablecoins. However, delayed regulatory implementation and insufficient reserve assets remain significant obstacles. If Naver can complete its compliance efforts and establish user habits before the 2027 legislative deadline, it has the potential to become a key vehicle for South Korea's digital financial sovereignty and secure a share of the global stablecoin market.