South Korea’s Largest Banks Collaborate on Won-Backed Stablecoin
A consortium of principal commercial banks in South Korea is making significant progress toward the introduction of a stablecoin linked to the Korean won. This coalition, featuring KB Kookmin, Shinhan, Woori, Nonghyup, Industrial Bank of Korea, Suhyup, Citi Korea, and Standard Chartered Korea, is spearheading the initiative. Their aim is to bring a bank-issued digital won into circulation by late 2025 or early 2026.
The rationale for this collaboration is to provide a counterbalance to the growing prevalence of dollar-centric stablecoins such as USDT and USDC. Various traders and participants within South Korea’s crypto space have increasingly utilized these foreign stablecoins, often to bridge payment and trading gaps. However, with approximately 57 trillion won in dollar stablecoin transaction volume recorded in the first quarter of 2025, domestic banks are clearly eager to regain authority.
National Effort for Fiscal Sovereignty
This stablecoin effort is closely linked to escalating worries regarding monetary independence. Financial regulators and legislators are growing concerned about the extent of influence that foreign-denominating digital currencies currently exert on local commerce. Many perceive this as a slow erosion of national authority, particularly since private entities outside Korea are responsible for the issuance and management of the currency utilized by local traders and consumers.
Significant step in South Korea!
Eight leading banks are collaborating to introduce a Korean Won stablecoin
Two issuance frameworks under consideration:
Launch may occur by year’s end
— SWFT Distributed record (@SwftCoin) June 25, 2025
The banks engaged in the won-backed stablecoin project are receiving assistance from the Open Distributed database and DID Association, alongside the Korea Financial Telecommunications and Clearings Institute. These organizations are overseeing technical advancements and potential regulatory frameworks. Two models are under evaluation. The first would require that user funds are held in trust, while the second would dispense tokens directly in trading platform for customer deposits.
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Response from the Central Bank
The Bank of Korea is approaching the situation with caution. Deputy Governor Ryoo Sang-dai stated that any implementation should commence with authorized commercial banks and later broaden to encompass additional firms. Governor Rhee Chang-yong recognized the potential benefits of a domestic stablecoin but also raised concerns about possible negative implications. One issue is that facilitating exchanges between stablecoins may actually boost market demand for dollar-pegged assets rather than diminish it.
The central banking authority is in the process of developing its own wholesale CBDC model for financial institutions. Nonetheless, it appears ready to permit commercial banks to guide the initiative for a retail-oriented stablecoin, provided that clear regulations are established and the initiative progresses incrementally.
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Establishing a Regulatory Framework
The rollout of the stablecoin is also in line with a wider legislative movement. The Democratic Party is pushing forward the Digital Asset Basic Act aimed at defining and regulating digital assets, including stablecoins. Legislators anticipate that this law will establish the groundwork for the issuance of these tokens, outline who can oversee them, and determine necessary transparency standards.
In parallel, several banks such as KB Kookmin have initiated trademark applications for names like KBKRW and KRWST, indicating that progress is being made. Legal assessments and crypto law inspections are ongoing, yet if everything follows the timeline, trials could commence in late 2025.
Future Outlook
South Korea is not alone in pursuing this path. Japan is implementing bank-backed stablecoins within its own regulatory framework, while Europe is advancing under the MiCA initiative. The distinguishing factor for South Korea is the impressive scale and speed of partnership among its major banks. By acting collectively, they aim to introduce a solution that is both trusted and regulated, entirely supported by Korean financial entities.
The impact of this stablecoin on local payment systems or its coexistence with dollar-tethered tokens will depend on user reception and the efficiency with which regulators and banks manage its introduction. What is evident is that South Korea is preparing to adopt a more proactive stance in regards to the functioning of digital currency within its national boundaries.
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- South Korea’s leading banks intend to introduce a won-based stablecoin by late 2025 or early 2026, with the objective of diminishing dependency on dollar-backed currencies like USDT and USDC.
- Regulators are advocating for this initiative to mitigate reliance on foreign digital currencies and safeguard monetary independence.
- The Bank of Korea supports a methodical rollout beginning with authorized banks, while actively developing its own wholesale CBDC model.
- This project aligns with the forthcoming Digital Asset Basic Act, which will establish guidelines for stablecoin activities, issuance rights, and transparency obligations.
- Organizations have begun registering trademarks such as KBKRW and KRWST, signaling that the foundational work for South Korea’s inaugural major bank-issued stablecoin is well advanced.
The post South Korea’s Biggest Banks Join Forces on Won-Backed Stablecoin appeared first on 99Bitcoins.
