Kakao Group has entered a strategic partnership with stablecoin issuer Circle to explore payment infrastructure for won-backed stablecoins, as South Korea advances toward a comprehensive regulatory framework for digital assets.

On Thursday, the companies announced that Kakao, Kakao Pay, and Kakao Bank had signed a memorandum of understanding (MOU) with Circle Internet Group. The agreement calls for the firms to explore integrating Circle's blockchain and global payment infrastructure with Kakao's consumer platforms and financial services. The partnership pairs Circle, the issuer of USD Coin (USDC), the second-largest stablecoin by market capitalization, with one of South Korea's most entrenched digital ecosystems — Kakao's messaging app dominates daily communication in the country, while Kakao Pay and Kakao Bank reach tens of millions of users across payments and retail banking.

The partnership underscores how leading South Korean consumer and financial platforms are positioning themselves ahead of anticipated stablecoin legislation — before the regulatory framework has even been finalized. It also reflects a broader push by Circle to deepen its footprint across Asia, where the company has been pursuing partnerships to expand stablecoin-based payment and settlement corridors.

Under the MOU, the companies plan to evaluate stablecoin payments, cross-border remittances, merchant settlement, and interoperability between traditional financial systems and blockchain networks. They will also explore support for tokenized financial services, though no specific products or launch timelines have been disclosed.

Cointelegraph reached out to Circle and Kakao Group for comment but had not received a response by the time of publication.

South Korea's Stablecoin Framework

South Korea has been developing legislation to govern won-backed stablecoins, as policymakers aim to foster digital payment innovation while addressing risks tied to reserves, redemption mechanisms, and issuer oversight.

The government has been preparing a bill that would set requirements covering stablecoin issuance, collateral management, and internal controls. Lawmakers have also put forward competing proposals amid growing support for won-pegged tokens designed to reduce the country's reliance on the US dollar.

The regulatory process, however, has stalled over disagreements about which institutions should be permitted to issue won-based stablecoins. The Bank of Korea, the nation's central bank, has argued that banks should retain a majority stake in stablecoin issuers, while the Financial Services Commission cautioned that strict eligibility limits could constrain competition and innovation.

In its economic growth strategy announced on July 14, the government listed advancing the Digital Asset Basic Act as a priority for the second half of 2026.

Meanwhile, companies and financial institutions in South Korea have already begun testing the underlying technology. In April, internet-only bank Kbank partnered with Ripple to test blockchain-based remittances. In May, KB Financial Group completed a pilot program covering stablecoin issuance, offline merchant payments, and cross-border remittances through the Kaia blockchain. KB Financial Group stated it was preparing to launch stablecoin services once regulations take effect. The sequence of pilots signals that South Korea's major financial institutions intend to be commercially ready as soon as lawmakers resolve the remaining jurisdictional questions — and that partnerships with established global stablecoin infrastructure providers are becoming a key differentiator in that race.