South Korean Stocks Rally on Crypto Policy Hopes
South Korea’s stock market is on a tear this year, and it looks like cryptocurrency might be fueling part of the surge. The Kospi Composite index has climbed almost 30% since January, outpacing most other markets in Asia. A big part of that momentum seems tied to President Lee Jae-myung’s recent comments about allowing won-backed digital currencies—something that’s got retail investors piling into related stocks.
But it’s not all smooth sailing. Shares of companies linked to the Bank of Korea’s digital currency projects have been on a wild ride. LG CNS, for example, shot up around 70% in June before cooling off as traders cashed in. Kakao Pay did even better, more than doubling in value. The moves feel speculative, and you have to wonder how much of this is hype versus real long-term potential.
Fintech Firms Catch the Speculative Wave
Over on the Kosdaq, smaller companies are making even bigger swings—especially those with any vague connection to stablecoins. Take Aton, a fintech security firm, which jumped 80% recently. Then there’s ME2ON, a mobile game producer whose stock tripled after its subsidiary launched a dollar-pegged stablecoin for online casinos.
All this excitement has pushed margin debt to a staggering ₩20.5 trillion ($15 billion), according to industry data. People are borrowing heavily to chase these gains, even though the government hasn’t actually laid out clear rules for cryptocurrency yet. It’s a bit of a gamble, but then again, that’s nothing new for South Korea’s retail investors.
Policy Shifts Stir the Market
The speculation heated up after President Lee named Kim Yong-beom, a known supporter of digital tokens, as his top policy adviser. Then came a proposed bill that would let companies with at least ₩500 million in equity issue won-backed stablecoins.
South Korea’s crypto market is already one of the most active in the world—about 20% of the population trades digital assets. In the first quarter alone, USD-pegged stablecoins saw ₩57 trillion in trading volume. That’s got the Bank of Korea scrambling to figure out its own digital currency plans.
Banks and fintech firms are eager to get into stablecoins, but no one’s sure yet how regulators will handle it. “We’re ready to move, but everything depends on where the government sets the boundaries,” one industry insider said.
Meanwhile, Bank of Korea Governor Rhee Chang-yong has sounded cautious, warning about risks if non-bank companies start issuing won-pegged stablecoins. He’s worried about capital flows and whether it could mess with monetary policy.
So far, though, those concerns aren’t slowing down the market. Whether that’s a good thing or not—well, we’ll probably find out sooner rather than later.
