South Korea's Fair Trade Commission is reviewing the merger of NAVER Financial and Dunamu by confining the market for won-pegged stablecoins — a market that does not yet exist — to the domestic arena, raising questions about whether that is the right yardstick. Won-based coins could grow into a vehicle for cross-border remittances and payments, and their relationship with dollar stablecoins and large overseas exchanges needs to be weighed as well. Analysts in the market say assessing the competitive landscape around domestic operators alone does not match reality.
According to financial industry sources on the 15th, 24-hour trading value for Tether (USDT), a dollar stablecoin, on Upbit, the country's largest cryptocurrency exchange, stood at about $88.79 million, or roughly 118.9 billion won, as of 6:10 p.m. on the 13th.
Over the same period, USDT traded against bitcoin (BTC) and USD Coin (USDC) on Binance, the world's largest exchange, totaled $3.769 billion. That makes Upbit's volume just 2.36% of Binance's.
Despite the wide gap in stablecoin trading between domestic and overseas exchanges, the FTC is treating the relevant market in its review of the NAVER Financial-Dunamu merger as domestic only. The commission plans to convene a plenary session on the 18th to deliberate on the deal, about a year after the filing was received on Nov. 28 last year.
The FTC is focusing on whether the combination of the two companies could restrict market competition. The central question is how broadly to define the market the merger would affect. The commission designated 10 markets for review, including the market for issuing won-pegged stablecoins, and set the geographic scope of all of them as domestic.
On won-pegged stablecoins, the commission determined that the deal creates two vertical combinations — between issuer and exchange, and between exchange and simple-payment operator — along with two conglomerate combinations between issuer and the simple-payment and shopping businesses. The point, it said, is to examine whether issuance, circulation and actual payment of won-based coins could all take place within a single corporate group once NAVER's payment and shopping ecosystem is joined with Dunamu's exchange business.
Industry criticism has been loud that limiting the won-coin market to South Korea is a judgment detached from reality. With large overseas exchanges leading the market on the strength of enormous volume and liquidity, judging the deal solely by competition among domestic operators risks overstating market power relative to what it actually is, critics say. The argument is reinforced by overseas exchanges moving into the Korean market in practice, including Binance's acquisition of the domestic exchange Gopax.
Some also say a merger review focused only on the domestic market is out of step with the plan to cultivate won-pegged stablecoins as a global payment instrument. For won-based coins to build competitiveness in global circulation after issuance, their use would have to extend beyond payments at domestic merchants to overseas remittances, cross-border commerce and settlement between global companies. That could mean overseas consumers using won-based coins to buy goods from Korean online shopping malls, or foreign firms using them to pay Korean companies. That is why Rep. Ahn Do-geol of the ruling Democratic Party of Korea has said the introduction of won-pegged stablecoins "could open a new opportunity for national growth, beyond financial innovation."
The actual rivals to won-based coins are not limited to domestic issuers. They will have to compete for users not only with other Korean issuers but also with dollar stablecoins such as USDT and USDC, which are already established in the international remittance and payments market. "Just because a won-pegged stablecoin is issued in Korea does not mean competition is confined to domestic operators," one financial industry official said. "Because this market has not yet formed, competition with global stablecoins and the possibility of overseas operators entering must all be taken into account."
Original reporting by Kim Jung-woo for Seoul Economic Daily.
AI-translated from Korean. Quotes from foreign sources are based on Korean-language reports and may not reflect exact original wording.
Watch · Seoul Economic Daily
Most Read This Week
- 1
Nvidia CEO Admits Affair With Woman Suspected of Chinese Spying - 2
Jensen Huang Called Himself a "Piece of Shit" Before Quitting Nvidia - 3
Madison Huang Cancels Korea Trip, Scrapping Meeting With Minister - 4
U.S. Intelligence Suspected Chinese Woman Near Nvidia CEO of Spying - 5
U.S. Memo Alleges Nvidia CEO Dated Suspected Chinese Spy
