Shares of Kakaopay dropped sharply after unstable buying and selling as regulators warn of dangers tied to widespread stablecoin adoption.
Shares of South Korean digital funds agency Kakaopay tumbled as a lot as 17% on June 27 after buying and selling resumed Thursday, following a one-day suspension by the Korea Alternate, Bloomberg reported.
The halt got here simply days after an earlier suspension on Tuesday, triggered by a pointy rally that noticed the inventory surge round 50% in two classes. Furthermore, the inventory has tripled in worth over the previous month, fueled by investor pleasure over the corporate’s potential transfer into stablecoins.
The change suspended the inventory twice because of its excessive value volatility, in the end designating Kakaopay as an “investment risk.”
“Kakaopay was definitely overheated and went ahead of its fundamentals,” mentioned Shawn Oh, an equities dealer at NH Funding & Securities Co. in Seoul. “Going forward, the stock will face a reality check.”
As beforehand reported by the Korea Instances, Kakao Pay just lately filed 18 trademark functions. KakaoBank, one other main Kakao Group affiliate, has additionally submitted a number of trademark functions associated to its stablecoin enterprise, overlaying cryptocurrency software program, monetary transaction providers, and mining underneath model names reminiscent of BKRW and KRWB.
“We submitted the trademark applications to proactively respond to developments in the stablecoin market,” a KakaoBank official mentioned. “We will continue to carefully monitor relevant legal frameworks and market dynamics.”
These strikes coincide with accelerated legislative discussions in South Korea’s Nationwide Meeting on the Digital Asset Framework Act, which, as soon as enacted, would allow issuance of won-pegged stablecoins and open the market to main monetary and fintech corporations like KakaoBank and Kakao Pay.
Nevertheless, the Financial institution of Korea just lately cautioned that the widespread adoption of stablecoins may result in dangers together with market instability brought on by mass withdrawals (coin runs) and disturbances within the overseas change market.
Equally, the Financial institution for Worldwide Settlements famous that stablecoins usually are not an alternative to conventional cash, and their future position stays “unclear.”
