South Korean digital payments firm Kakaopay saw its stock plunge 17% on June 27, 2025, after regulators flagged concerns over the growing risks of stablecoin adoption. The drop followed a volatile trading week that included two trading suspensions due to extreme price movements.
What Caused the Crash?
Kakaopay’s stock had recently surged by around 50% in just two trading sessions, sparking a temporary halt in trading by the Korea Exchange (KRX). The stock has tripled in value over the past month as investors speculated on the company’s entry into the stablecoin market.
But that excitement came with warnings. The exchange ultimately flagged Kakaopay as an “investment risk” due to its excessive volatility.
“Kakaopay was definitely overheated and went ahead of its fundamentals,” said Shawn Oh, an equities trader at NH Investment & Securities Co.
Stablecoin Speculation
The spike in Kakaopay’s stock came amid speculation about its expansion into digital currency. According to reports, Kakaopay and its sister firm KakaoBank—both part of the larger Kakao Group—have filed multiple trademark applications related to stablecoins. These trademarks cover crypto-related software, financial services, and even digital currency mining.
Some of the brand names filed include KRWB and BKRW, hinting at potential won-pegged stablecoin offerings.
A KakaoBank spokesperson confirmed the move:
“We submitted the trademark applications to proactively respond to developments in the stablecoin market. We will continue to monitor the legal and regulatory environment closely.”
Regulatory Red Flags
However, the Bank of Korea (BoK) and other financial authorities are sounding the alarm. The central bank has expressed concerns about stablecoins, warning of potential risks such as:
Market instability during mass redemptions or “coin runs”
Volatility in foreign exchange markets
Systemic risks if stablecoins gain widespread use without proper oversight
The Bank for International Settlements (BIS) also weighed in, saying that stablecoins are not a reliable replacement for traditional money and that their long-term use remains uncertain.
Legislative Outlook
South Korea is currently debating the Digital Asset Framework Act, a landmark bill that could legalize won-pegged stablecoins and pave the way for major banks and fintech firms to enter the crypto space. If passed, companies like Kakaopay and KakaoBank would be in prime position to lead the charge—assuming they can satisfy new regulatory demands.
