SK tipped to be Korea's 1st group to issue digital coins

SK Square Co., the investment arm of SK Group, is working on issuing its own digital currency within the year, according to people with knowledge of the matter on Wednesday.

The digital coin, once issued, will likely be exchangeable not only for virtual goods in SK Telecom Co.'s metaverse digital space, but also for real-life items on the group's e-commerce and streaming platforms.

SK Square recently launched a task force to prepare its foray into the digital currency area and other blockchain-based businesses. It has completed its legal review of the virtual currency issuance, which will take place as early as this year, the sources said.

If the plan goes through, the country's third-largest conglomerate will become the first among South Korea's top 10 business groups to mint a cryptocurrency.

Unlike the existing cryptocurrencies, most of which circulate only in the virtual space such as play-to-earn games, SK Square's digital coins will likely be used for a broader range of real-life services provided by the group's units.

For example, a cyber character, or avatar, creates shoes on SK Telecom's metaverse platform eFriend in return for digital coins. The cryptocurrency can then be exchanged for real-life shoes on SK Group's e-commerce platform 11Street Co., video content on SK's over-the-top streaming platform Wavve, or navigation services from TMap Mobility Corp.

Further, its digital currency can be used for SK Telecom's subscription services, encompassing music downloads, home training and direct delivery of products sold by Amazon. 

The company expects to build its cryptocurrency ecosystem within the group, which should build credibility and sustain demand for its digital coins, according to the sources.

SK Square will use SK Telecom's blockchain technology to create its digital coins. 

GROUP-WIDE SUPPORT

At present, there is a de facto ban on the domestic issuance of cryptocurrencies.

But Yoon Suk-yeol, who was elected South Korea's next president earlier this month, promised deregulation on the cryptocurrency trade, including allowing the issuance of digital coins in the country. 

South Korea's cryptocurrency trading market reached 55.2 trillion won ($45 billion) as of end-2021, according to the Korea Financial Intelligence Unit. Its daily transaction value averaged 11.3 trillion won in the country, closer to the 11.9 trillion won in daily turnover on the junior Kosdaq market.

SK Square is the sub-holding company of SK Group and holds stakes in chipmaker SK Hynix Inc., 11Street, TMap Mobility and SK Planet Co., an online marketing platform.

Shortly after it was spun off from SK Telecom late last year, SK Square spent 90 billion won to buy a 35% stake in Korbit, one of the country’s top four cryptocurrency exchanges.

As the No. 2 shareholder in Korbit, SK Planet on Wednesday signed an agreement with the crypto exchange to join forces to develop blockchain-related services, including non-fungible tokens.

INITIAL COIN OFFERING

After issuing a virtual currency, SK Square will make an initial coin offering (ICO) either at home or abroad so that it can become a tradable asset.

"SK Square wants to create and grow its own cryptocurrency ecosystem within the group, rather than just introducing its crypto to be used for some of its services," a cryptocurrency industry source told The Korea Economic Daily. 

"Since ICOs are banned in South Korea at present, SK will likely consider going abroad for an ICO, or taking a wait and see attitude to monitor domestic regulatory changes," he said. 

Write to Han-Gyeol Seon and Sung-Soo Bae at always@hankyung.com
Yeonhee Kim edited this article.