The "digital alliance" between financial institutions and cryptocurrency firms is gaining momentum. Hana Bank announced on the 15th that it will acquire a 6.55% stake in Dunamu, the operator of Korea's largest cryptocurrency exchange Upbit, for approximately 1 trillion won. This marks the largest-ever investment by a Korean commercial bank in a cryptocurrency company. The "digital alliance" between the two firms appears to be a strategic move to take a leading role in cutting-edge financial sectors such as won-pegged stablecoins and blockchain infrastructure. It reflects a sense of crisis that a management model dependent on net interest margins — essentially "skimming interest" — is bound to lose to global financial giants armed with advanced financial and investment techniques.
Even more noteworthy is Dunamu's pending business combination with Naver Financial. Once the Fair Trade Commission grants final approval, a vast financial ecosystem will emerge, encompassing Hana Bank's traditional finance, Dunamu's cryptocurrency infrastructure, and Naver's payment technology. Other financial firms are equally busy. Mirae Asset Group earlier acquired a 92% stake in cryptocurrency exchange Korbit, and Korea Investment & Securities is reviewing an acquisition of Coinone. Banks, securities firms, fintechs, and cryptocurrency companies are all struggling to survive by adapting to a rapidly changing financial environment.
Yet Korea's legal system is failing to keep pace with this reality. The government and ruling party are urging companies to pursue financial innovation, but they are turning a blind eye to the policies and legislation needed to support the digital transformation. The Digital Asset Basic Act, which is meant to institutionalize cryptocurrencies, has stalled with no progress in sight, as discussions themselves have come to a halt. Legislative discussions on introducing won-pegged stablecoins are also drifting indefinitely amid a pile of contentious issues — including who should be allowed to issue them, capital requirements, and limits on major shareholders' stakes in exchanges — compounded by the failure of bipartisan coordination and turf wars among government ministries.
While Korea has been hamstrung by this policy vacuum, major countries are steadily moving forward with regulatory reforms for financial innovation. The U.S. Senate has passed the Clarity Act, which establishes the legal status and regulations for cryptocurrencies as a whole. Japan and Europe have already enacted and implemented cryptocurrency-related legislation. This is no time to stand idle. If K-finance is to avoid falling behind in the rapidly evolving digital financial market, the government and ruling party must pass the Digital Asset Basic Act and put related regulations in place as quickly as possible.
