KR — ZDNet Korea
Card Industry Moves Into Stablecoin Payments, but Foreign Issuers' Asset-Freeze Power Is a Variable
Blockchain4 min read
Korean card companies are testing payments using stablecoins, which are crypto coins tied to a stable currency like the US dollar. A recent hack at the Binance crypto exchange has raised a new worry: the companies that issue these coins can freeze them.
What happened
Reports say more than $5.7 billion in crypto was stolen in a hack of the global crypto exchange Binance on the 29th (US time). The stolen assets included stablecoins issued by Tether and Circle. After the hack, the issuers froze the related assets. This showed that the issuers can control transfers of their coins, even apart from the exchange. Circle's USDC terms say it can limit transfers from certain blockchain addresses. So even if a user holds enough coins, their transfers can be blocked if the address is frozen.
Key facts
- Stolen crypto: more than $5.7 billion (57億 달러)
- Hack date reported: the 29th (US time)
- Stablecoin issuers named: Tether and Circle
- Hana Card signed a deal with Circle in December last year
- On the 1st of this month, Hana Card, Hana Bank and Tether signed a three-way deal
What is going on in Korea
Korean card companies are running proof-of-concept tests, which are small trials to check whether a new technology works. A customer pays with stablecoins, and the store gets its money right away. Hana Card is the most active so far, with deals with both Circle and Tether. The companies have not made public how they would handle exceptions, such as a frozen account, so outside people cannot yet judge how safe the system is.
Why it matters
If card companies use coins issued abroad, the issuer's power to freeze coins becomes an important risk to check. A financial industry insider said that safeguards such as freezing, and the control systems behind them, need to be reviewed before a full launch. The insider said these rules appear in global regulations, such as those in the United States, and are needed when such payments enter Korea's official financial system. As stablecoin payments spread across the card industry, a key question will be how to connect control by overseas issuers with the responsibility of domestic payment companies.
What to watch
- Whether card companies publish how they handle frozen coins and other exceptions
- Results of the proof-of-concept tests for real-time payments to stores
- How Korean rules for stablecoins are written, especially on who is responsible
- Whether more card companies sign deals with overseas stablecoin issuers