By Hyoung Joong Kim, Professor at Korea University
Edited and adapted by Korea IT Times
Skepticism surrounding stablecoins tends to return to the same point. Stablecoins are fast, efficient and capable of moving across borders, yet when the moment of redemption and settlement arrives, they are still expected to knock on the door of the traditional financial system. The conclusion of that criticism is also broadly the same. Stablecoins are seen as an incomplete instrument that cannot achieve payment finality on their own and must rely on the fiat system to function.
But this kind of categorical criticism rarely examines the larger premise beneath it. It assumes that every payment must ultimately be completed in fiat currency. The reason stablecoins appear unfinished may lie not so much in any technical limitation as in the long-held view that the flow of money must, in the end, come to rest in fiat.
Payment finality is not a law of nature but a product of institutions
In today’s financial system, payment finality is generally understood to be secured when a transaction is settled in central bank-issued money. By that standard, stablecoins appear structurally limited. A payment is difficult to regard as fully complete until it passes through the banking system and is converted into fiat currency.
Yet there is no reason to treat that standard as self-evident. The belief that a transaction must ultimately be settled in central bank money is less a natural law than a convention shaped by history and institutions. Looking back at the bill-of-exchange networks of medieval Europe or the coexistence of private banknotes in the 19th century, economic actors have repeatedly built their own forms of finality. It is more accurate to say that where money ends has been determined not by technology, but by social agreement and institutional design.
In that sense, today’s fiat-centered standard of finality is not the only possible answer. It is, rather, the historical outcome of a long period in which central bank systems gained dominance. If stablecoins appear to fall short of that standard, it may be because a new instrument is still being judged by an old measure.
Why stablecoins appear “unfinished” has more to do with institutions than technology
The reason stablecoins are still treated as unfinished payments, even though they can independently confirm transactions, lies more in the institutional environment than in the technology itself. Transactions conducted on a blockchain may already be verified and finalized within the network, but the core obligations and accounting units of the real economy are still designed around fiat currency.
Taxation is the clearest link. In most countries, tax obligations are imposed and discharged in fiat currency. That means that even if a digital asset-based circular economy expands to a meaningful scale, it still has to reconnect with the fiat system at the point where it meets the institutional economy. Stablecoin circulation does not break down because the network is incomplete, but because it has not been allowed to stand fully outside the existing system.
That does not justify calling it a technological failure. What prevents taxes from being paid in stablecoins is not an algorithmic shortcoming, but tax law and administrative design. In fact, some U.S. states have already seen discussions about allowing tax payments based on crypto assets. The scope remains limited, but it shows at least that the standard of payment finality is not fixed for all time.
Its meaning changes when the structure shifts from conversion to circulation
The character of stablecoins depends on where and how widely they are used. When they remain confined to exchanges, they are easily seen as temporary instruments or trading tokens. But the picture changes if companies pay wages in stablecoins, consumers use the same unit for everyday purchases, and residual balances flow back into on-chain financial products. In that kind of structure, conversion into fiat becomes less a necessary step than an option.
Within such a closed-loop system, the meaning of payment finality also changes. A transaction confirmed on a blockchain remains valid without a third-party guarantee; every participant shares the same record, and no single institution can reverse it at will. That means the traditional core conditions of payment finality — irreversibility and shared consensus — are already being met.
In traditional finance, central banks guarantee finality because they serve as the ultimate anchor of trust. On a blockchain, by contrast, that trust shifts from a single institution to a distributed protocol. In an environment supported by sufficient circulation and social acceptance, finality no longer has to be borrowed from an external institution. It can be generated from within the network itself.
In the end, the issue is not technology but the range of social acceptance
Whether stablecoins are truly unfinished payment instruments ultimately depends on the premise from which they are judged. If one maintains that all transactions must finally resolve into fiat currency, stablecoins are unlikely to become more than efficient auxiliary tools within the existing financial system. But if they are viewed as a system capable of closing transactions within a circulation economy of sufficient scale, they may be read as an experimental prototype of a very different monetary order.
The substance of the matter, then, is not technical. The deeper issue is whether societies are prepared to accept wages denominated in digital assets, whether accounting frameworks can adjust to the realities of on-chain transactions, and how far legal systems are willing to recognize the final effect for payments executed on distributed ledgers.
What determines that outcome is not a more sophisticated algorithm. It is legislation, institutions, and a society that may either accept or resist such change. The limits of stablecoins do not primarily reflect technological immaturity. They reflect the reality that society has not yet formed a sufficient consensus on where, in the end, money should come to rest.
