South Korea’s prominent cryptocurrency exchange, Upbit, has announced a collaboration with Naver Pay to roll out a new stablecoin initiative pegged to the won (KRW). This move is significant, especially following the Bank of Korea’s recent decision to halt plans for a Central Bank Digital Currency (CBDC), alongside the current president’s backing of a won-based stablecoin market.
Key Insights:
- Upbit and Naver Pay are jointly working on a framework for the KRW stablecoin.
- The initiative is expected to reduce the “kimchi premium,” a term referring to the price discrepancies between South Korean cryptocurrency exchanges and international markets.
- It aims to facilitate more straightforward on-chain exchanges with USDT or USDC, mitigating cross-border trading challenges.
A representative from Dunamu, which owns Upbit, stated that while details remain limited, they are focusing on operational frameworks for the stablecoin tied to their payment services.
“We will specify the scope and methods of cooperation as soon as the relevant system is established,” the official said, signifying proactive engagement in this evolving market.
The push for a KRW stablecoin comes at a pivotal time, as local traders face challenges related to the cross-border movement of KRW, creating arbitrage opportunities that previous crypto transactions have exploited. This cryptocurrency is seen as a necessary evolution for enhancing liquidity in local trading environments.
