Crypto protocols Frax and IQ have collaborated to launch KRWQ, a Korean won-pegged stablecoin, ensuring it meets regulatory standards during South Korea’s movement towards enhancing local currency stablecoins. The announcement was made on a Thursday, revealing that KRWQ would be the first fully backed won stablecoin operational on the Base blockchain affiliated with Coinbase, alongside a trading option with the US dollar stablecoin, USDC.
The promotion of KRWQ also highlights it as the first multichain solution for won-denominated stablecoins, allowing transactions across various networks through cross-chain protocols like LayerZero and Stargate Finance.
In response to the increasing interest in local currency stablecoins, South Korea is establishing a comprehensive regulatory framework. Additionally, the Bank of Korea is advocating for the banking sector to oversee the implementation of stablecoins. This has incited some criticism from the crypto community, particularly from Dr. Sangmin Seo, chair of the Kaia DLT Foundation, who urged the central bank to create clear guidelines that will reduce financial risks while encouraging innovation.
Navin Vethanayagam, the co-founder of IQ, stated:
“KRWQ fills a critical gap in the market. While USD-backed stablecoins dominate today, no credible won-denominated stablecoin has ever launched at scale.”
Frax and IQ affirmed that the KRWQ stablecoin has been developed with future legislation in mind and aims for full adherence to the anticipated regulatory measures in South Korea. Despite this, the stablecoin will not be marketed to residents of South Korea and is designed specifically for global decentralized finance (DeFi) markets. Minting and redemption processes are restricted to “eligible KYC’d counterparties,” including exchanges, market makers, and institutional partners.
The introduction of KRWQ comes shortly after the announcement from South Korean crypto custodian BDACS regarding their own planned won-backed stablecoin named KRW1, set to operate on Circle Internet Group’s new blockchain, Arc.
