Korean banks are wiring stablecoin rails before the law lets them issue

Shinhan, a South Korean financial group, has agreed to test issuing, sending, and cashing in stablecoins on Visa’s payment platform.

This is Shinhan’s second major stablecoin partnership in four months as Seoul gets closer to creating formal rules for the stablecoin sector.

Shinhan builds on Visa’s platform

On August 24, at Shinhan’s headquarters in central Seoul, the two businesses signed a strategic business agreement.

Shinhan wants to run stablecoin functions through Visa’s existing platform and then create a business model that fits Korea’s market. The pilot covers issuing tokens, sending them to other people, and cashing them in.

The pair also plans to test the tokens in card payment settlement, build AI-powered payment models, and expand both business-to-business and business-to-consumer payment lines.

Shinhan said that it would connect Visa’s global network to its main subsidiaries, such as Shinhan Bank, Shinhan Card, and Jeju Bank.

Jin Ok-dong, who chairs Shinhan Financial Group, said, “Through this agreement, we have expanded our long-standing partnership with Visa to the broader digital finance sector.”

He added that the group aims to “deliver differentiated financial experiences to our customers.”

Shinhan Card and the Solana Foundation signed a memorandum of understanding at the end of April to test stablecoin payments on Solana’s layer-1 blockchain.

The group’s asset management arm made a deal with the Solana Foundation, Etherfuse, and Orca at the beginning of August to test a KRW-denominated tokenized fund.

Shinhan is building services it cannot legally sell yet

In July, Shinhan, Samsung Electronics, and Dunamu were among the 13 Korean companies that joined OpenUSD, a 140-company effort to standardize a dollar-backed token for payments supported by Visa and Mastercard.

The current Visa deal goes back to April, when business leaders from both sides talked about working together. In the most recent quarter, Shinhan had a net income of 1.82 trillion won, which is about $1.3 billion.

South Korea is working through the Digital Asset Basic Act, a framework that covers stablecoins, exchange licensing, and crypto exchange-traded products (ETPs).

Back in December, lawmakers and regulators proposed a plan to restrict KRW stablecoin issuance to consortia. These consortia must have commercial banks owning at least 51%, in response to Bank of Korea warnings that non-bank issuers could undermine monetary policy and deposit protection.

Rival KB Financial completed a KRW stablecoin pilot in May on the Kaia blockchain, reducing cross-border transfer times to around three minutes.

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