A group of prominent commercial banks in South Korea is advancing toward the launch of a stablecoin pegged to the Korean won. This initiative is led by a consortium that includes KB Kookmin, Shinhan, Woori, Nonghyup, Industrial Bank of Korea, Suhyup, Citi Korea, and Standard Chartered Korea. The objective is to introduce a bank-issued digital won by late 2025 or early 2026.
The rationale behind this collaborative effort is to provide a local alternative to the increasing prevalence of dollar-based stablecoins like USDT and USDC in South Korea’s cryptocurrency landscape. These foreign assets have been heavily utilized within the local market to facilitate payments and trading, leading to approximately 57 trillion won in transactions involving dollar stablecoins during the first quarter of 2025. As such, local banks aim to reclaim monetary control.
Domestic Push for Monetary Control
This stablecoin initiative is prompted by rising concerns regarding monetary sovereignty. South Korea’s financial authorities and legislators have expressed unease about the level of influence foreign-denominated digital assets exert on domestic transactions. There is a perception that this may lead to a gradual erosion of national control, given that private companies outside Korea issue currencies that are transacted by local traders and consumers.
🇰🇷 Major move in South Korea! 8 top banks are teaming up to launch a Korean Won stablecoin 🪙 Two issuance models on the table: ✅ Trust Model ✅ Deposit Token Model Launch could happen by year-end 👀 source
The banks involved in this won-backed stablecoin project are receiving support from the Open Blockchain and DID Association along with the Korea Financial Telecommunications and Clearings Institute, which are tasked with technical development and formulating regulatory frameworks. Two possible structures for the stablecoin are under consideration: one involving the holding of user funds in trust while the other aims to issue tokens directly against customer deposits.
Central Bank Reactions
The Bank of Korea has taken a cautious stance, with Deputy Governor Ryoo Sang-dai stating that any rollout of the stablecoin should initially involve licensed commercial banks, before potentially expanding to other firms. Meanwhile, Governor Rhee Chang-yong has acknowledged the possible benefits of a domestic stablecoin but has also raised concerns: easing the conversion between stablecoins could paradoxically increase demand for dollar-backed assets instead of reducing it.
The central bank is concurrently developing its own model for a wholesale Central Bank Digital Currency (CBDC) aimed at institutions. However, it seems the Bank of Korea is inclined to allow commercial banks to lead the charge on a retail-facing stablecoin, provided clear regulations are established and the process is gradual.
Laying the Ground for Regulation
The establishment of the stablecoin aligns with broader legislative efforts, particularly the Digital Asset Basic Act, which seeks to define and regulate digital assets, including stablecoins. Lawmakers anticipate that this legislation will lay the groundwork for the issuance of stablecoins, define management responsibilities, and establish necessary transparency standards.
Simultaneously, various banks, including KB Kookmin, have already filed for trademarks such as KBKRW and KRWST, indicating that significant technical and compliance groundwork is underway for South Korea’s first major bank-issued stablecoin. If development proceeds as planned, pilot programs could commence by late 2025.
Looking Ahead
South Korea isn’t alone in this endeavor; Japan is initiating its own bank-backed stablecoins under a unique regulatory framework while Europe moves forward under MiCA. What distinguishes South Korea is the scale and speed of collaboration among major banks, which seek to establish a trusted, regulated, and fully backed stablecoin by local financial institutions.
Whether this stablecoin will transform local payment systems or merely coexist alongside dollar-based tokens will depend on user reception and the efficacy of regulators and banks in managing its rollout. Clearly, South Korea is gearing up to take a proactive role in governing the dynamics of digital currency within its borders.
