[Click e-Stock] "Hecto Financial Highlighted for Growth Potential as a Stablecoin Settlement Infrastructure Hub"

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On March 9, iM Securities analyzed that Hecto Financial is emerging as a potential global settlement hub through the expansion of its stablecoin-based payment and settlement infrastructure. In particular, expectations are rising for Hecto Financial to benefit as a key infrastructure operator amid ongoing efforts to institutionalize the Korean won stablecoin.

Ho Jang, a researcher at iM Securities, stated, "After the unified Digital Asset Basic Act proposal by the government and the ruling party is finalized, it is expected to be submitted through legislation," adding, "It will be a comprehensive bill that covers the entire ecosystem, including the issuance, distribution, disclosure, and listing of virtual assets."

The Democratic Party of Korea is expected to soon hold a closed party-government consultation, finalize the unified Digital Asset Basic Act (second phase legislation) proposal with the government and the ruling party, and conclude final discussions. This bill, a follow-up to the Act on the Protection of Virtual Asset Users implemented in July 2024, aims to establish an institutional framework encompassing the overall virtual asset industry. The bill is expected to include a system for issuing Korean won stablecoins, regulations on virtual asset exchange ownership, and the introduction of a market maker (MM) system.

Researcher Jang explained, "In terms of the Korean won stablecoin issuance structure, it is expected that issuance will first be allowed to consortia in which banks hold more than 50% plus one share, as proposed by the Financial Services Commission," adding, "This is designed to ensure reliability in the initial issuance stage as well as to secure payment capability."

Regarding the regulation on virtual asset exchange ownership, there is discussion to limit the maximum stake of major shareholders to 20%, with a grace period of three years. There is also a plan under consideration to allow up to 34% ownership if exceptions are recognized by the Financial Services Commission through delegated enforcement ordinances.

Alongside this, the digital asset market is expected to introduce a market maker (MM) system similar to that of the stock market. Researcher Jang explained, "The policy will allow liquidity providers as one of the types of digital asset service businesses."

Amid such regulatory changes, the potential for Hecto Financial to expand its business model based on stablecoins is also drawing attention.

Researcher Jang stated, "In February, the company was registered as an official partner of CPN (Circle Payments Network), operated by global stablecoin issuer Circle," adding, "By joining CPN, it has secured an execution base for global stablecoin payment and settlement infrastructure."

CPN is a global stablecoin payment network. Through this network, Hecto Financial has established a foundation to immediately provide cross-border settlement services in countries where stablecoin usage is permitted under regulations.

Currently, Hecto Financial operates a structure in which, when overseas consumers make payments with stablecoins on domestic platforms, the domestic merchants are settled in Korean won (KRW).

Researcher Jang explained, "It will be possible to integrate the existing cross-border settlement service with the CPN infrastructure," adding, "By leveraging a blockchain-based settlement network, Hecto Financial can overcome the time and cost limitations of conventional financial networks and attract more overseas clients with global and domestic settlement needs."

In particular, once the Korean won stablecoin is legalized in the future, Hecto Financial's role is expected to grow even further.

He emphasized, "In the event of legalization and expansion of the Korean won stablecoin, we plan to organically link CPN's global settlement standards and the Hecto Wallet One infrastructure," adding, "Hecto Financial will be able to serve as a settlement and payment infrastructure hub, supporting not only the exchange and settlement of the Korean won stablecoin with major global digital assets, but also its practical use in global e-commerce environments."

There are also growing expectations for improved performance in Hecto Financial's existing businesses. The company currently holds the top market share in the simple cash payment market, and the number of subscribers to its account-based direct deposit payment service continues to increase.

Researcher Jang projected, "With the expansion of global clients using foreign currency settlement services and the continued growth of account-based direct deposit payment services within simple cash payments, profitability is expected to accelerate this year."

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