Korea will likely choose a prudent framework for stablecoin issuance in which banks will be the major issuers, instead of allowing nonbanks in the mix, S&P Global Ratings said Thursday.
Authorities could resort to banks as the key issuers at least in the initial stages of stablecoin adoption, backed by their solid risk management framework within regulatory supervision, S&P credit analyst Daehyun Kim said.
The regulators' preference is in contrast with some legislators' favored model that allows nonbank stablecoin issuers, which is more in line with frameworks in the US or the European Union, the rating agency said.
Bank issuers will hone in on institutional use cases such as cross-border wholesale settlement, raising linkages with the stablecoin market through both issuance and reserve assets, S&P said.
Bank deposits could possibly serve as a major component of stablecoin reserve assets, although market stress could drive deposit outflows for some banks and migration toward those with more solid deposit franchises, according to S&P.
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