A new partnership has been formed between Kakao Group and stablecoin issuer Circle with the goal of exploring payment infrastructure for stablecoins pegged to the South Korean won. This collaboration comes as the country moves toward implementing a more comprehensive regulatory framework for digital assets.

On Thursday, the companies announced that a strategic memorandum of understanding (MOU) was signed between Circle Internet Group and entities within the Kakao conglomerate, specifically Kakao, Kakao Pay, and Kakao Bank. Through this agreement, the partners will investigate opportunities to integrate Circle's global payment infrastructure and blockchain technology with the extensive consumer platforms and financial services offered by Kakao.

This partnership exemplifies a broader trend of major consumer and financial platforms in South Korea strategically preparing for upcoming stablecoin legislation, even while the final details of the regulatory framework are still being determined.

Scope of the Agreement

The scope of the memorandum of understanding outlines several areas for joint exploration. These include stablecoin-based payments, international remittances, solutions for merchant settlements, and the creation of links between legacy financial systems and blockchain networks.

Additionally, the partners will evaluate potential support for tokenized financial services. However, they have not yet revealed specific products or provided any timelines for a potential launch.

Attempts by Cointelegraph to reach Circle and Kakao Group for comment were made, but no response was received by the time of publication.

Navigating South Korea's Regulatory Landscape

This collaboration is taking place within a dynamic regulatory context. South Korean policymakers have been developing legislation to govern stablecoins backed by the won. Their objective is to foster innovation in digital payments while simultaneously managing the risks associated with reserves, redemption processes, and the supervision of issuers.

The government has been preparing a bill that would set forth requirements for stablecoin issuance, the management of collateral, and internal controls. Concurrently, lawmakers have put forward alternative proposals, reflecting a growing sentiment in favor of won-pegged tokens as a means to decrease the nation's reliance on the U.S. dollar.

However, progress on the regulatory front has been delayed due to disputes over which types of institutions will be authorized to issue stablecoins based on the won. The country's central bank, the Bank of Korea, has contended that traditional banks should retain a majority ownership stake in any stablecoin-issuing entities. In contrast, the Financial Services Commission has cautioned that such stringent eligibility criteria could stifle both competition and innovation within the sector.

As part of its economic growth strategy revealed on July 14, the South Korean government identified the advancement of the Digital Asset Basic Act as a key priority for the latter half of 2026.

Broader Industry Moves

In the meantime, various companies and financial institutions in South Korea have independently started to test related technologies.

• In April, the internet bank Kbank formed a partnership with Ripple to conduct trials on blockchain-powered remittance services.
• Following this in May, KB Financial Group successfully finalized a pilot program that tested stablecoin issuance, offline payments to merchants, and cross-border remittances utilizing the Kaia blockchain. The financial group also stated its intentions to roll out stablecoin services as soon as the new regulations are enacted.