[Issue Interview] "Invisible Innovation... Stablecoins Transform Payments from Behind the Scenes"

Interview with Hong Kihoon, Head of Toss Insight Research Institute

Stablecoins: The Core Is Cost Reduction

"The Moment the Tipping Point Is Reached, Rapid Expansion Will Follow"

Hong Kihoon, Director of Toss Insight Research Institute, poses ahead of an interview on March 31 at Toss Insight in Yongsan-gu, Seoul. Photo by Jinhyung Kang

"The essence of stablecoins lies in 'payment costs.' Even if there appears to be little change on the surface, if the invisible backend costs are reduced, that is true innovation."

In an interview with The Asia Business Daily on March 31, Hong Kihoon, Director of the Toss Insight Research Institute, emphasized the core value of stablecoins, saying, "It is still uncertain what form stablecoins will ultimately take, but as soon as they pass the 'critical point,' their adoption will spread rapidly."

Toss Insight is a financial management research institute established by Toss (Viva Republica) to analyze financial policies and industry trends, focusing on fintech (finance + technology). Last year, Toss appointed Hong as the institute's inaugural director. He is a finance expert with a Ph.D. in economics from the University of Cambridge in the UK and currently serves as an associate professor in the Business Administration Department at Hongik University.

Hong defined stablecoins not as simple digital assets or investment vehicles, but as "a transformation of infrastructure that reduces costs across the entire payment and settlement structure." He said, "All market participants agree on the direction of lowering transaction costs," adding, "However, no one can yet be certain whether this will be achieved through stablecoins, central bank digital currencies (CBDCs), or tokenized assets (RWAs)." He also noted, "Depending on which entity leads this infrastructure, the structure of the market could change completely in the future."

Hong pointed out that just because such changes are not easily perceived by the general public does not mean they are any less significant. He explained, "Even if users do not feel a dramatic difference, if backend payment costs are reduced, that is true innovation," adding, "This is directly related to increased efficiency in payment infrastructure."

Approaching KRW Stablecoins from the Perspective of 'Payment Efficiency'

Hong Kihoon, head of the Toss Insight Research Institute, is being interviewed on March 31 at Toss Insight in Yongsan-gu, Seoul. Photo by Kang Jinhyung

The global market is already witnessing the rapid proliferation of dollar stablecoins. Hong analyzed, "Dollar stablecoins are essentially digital dollars created on the foundation of the dollar's hegemony. In some countries where it is difficult to directly acquire U.S. dollars, these stablecoins are effectively functioning as substitutes for the dollar."

In contrast, Hong pointed out that KRW stablecoins have a fundamentally different character. He stated, "The Korean won is a currency with limited demand overseas, and even when people buy Korean goods, most payments are made in U.S. dollars, so there is almost no need to acquire won abroad. Therefore, it is more realistic to approach KRW stablecoins from the perspective of improving the domestic payment system's efficiency rather than expecting international adoption."

Hong also said, "South Korea already has a very well-developed, credit card-centered payment system," and noted, "Even if KRW stablecoins are introduced, users may not notice a significant difference compared to the existing system."

Currently, credit card companies are sensing a crisis as they detect structural changes in the payment environment, such as the potential for lower transaction fees. However, it remains difficult to predict exactly how these changes will materialize. Hong commented, "Card companies are aware that they are in a crisis, and while they anticipate the possibility of lower fees, it is hard for them to envision exactly how their business structures will change." He added, "Ultimately, card companies will inevitably face changes to their existing business models, and we are already seeing a 'big blur' phenomenon, where the boundaries among card companies, payment operators, and platforms are increasingly indistinct."

The Spread of Stablecoins: The 'Critical Point' Is Approaching

Hong Kihoon, Head of Toss Insight Research Institute, is being interviewed at Toss Insight in Yongsan-gu, Seoul on the 31st. Photo by Kang Jinhyung

Regarding the increasingly prominent concept of 'programmable money,' Hong explained, "For example, using smart contracts, government subsidies could be automatically set to be used only in specific industries. At the time of payment, users can immediately know whether the use is permitted, reducing inconvenience and costs." He added, "This can be applied in the same way to various areas such as insurance and automatic payments."

However, he also pointed out that technical limitations still exist. "Programmable money and smart contracts have not yet fully replicated human intuition, and real-time settlement based on blockchain still faces cost issues," he said.

Hong predicted that the societal adoption of stablecoin technology will be gradual. He stated, "As technology, regulation, and social perception interact, stablecoins are likely to spread slowly at first. However, once a certain critical point is passed, they could spread rapidly like the internet or railroads. There were initially perceptions that such technologies were 'unnecessary,' but once people began to use them, daily life changed completely." He went on to say, "The same could happen with stablecoins; after a certain moment, their adoption could accelerate rapidly."

Finally, Hong emphasized that the success or failure of stablecoins depends not only on the technology itself, but equally on society's choice. He said, "No matter how advanced the technology is, it is meaningless if it is not used. The catalyst for change is not technology, but social acceptance and user behavior. Ultimately, it is the people who make the choice that change the market," he stressed.

This content was produced with the assistance of AI translation services.