South Korean Banks Gear Up to Launch Won-Backed Stablecoin Amid Regulatory Scrutiny
Seoul, South Korea – South Korea is advancing its digital currency ambitions with plans to launch a stablecoin pegged to the Korean Won (KRW). Driven by the nation’s leading commercial banks, this initiative faces close regulatory scrutiny.
The introduction of a stablecoin marks a pivotal step in South Korea’s digital finance strategy, raising questions about its impact on monetary policy and economic stability.
Key Developments
Bank of Korea Emphasizes Cautious Approach
On June 24, 2025, Bank of Korea Deputy Governor Ryoo Sang-dai stressed the need for strict oversight, limiting initial participation to regulated banks to ensure financial system security and user trust.
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Concerns Over Currency Controls
Potential risks include:
- Disruption to foreign exchange systems.
- Capital flight weakening monetary policy effectiveness.
- Increased vulnerability to economic instability.
Did You Know? Capital flight refers to large-scale money outflows during economic or political crises.
Major Banks Collaborate on Won Stablecoin
Eight institutions—including KB Kookmin, Shinhan, and Woori—are developing a 1:1 won-backed stablecoin. Two models under consideration:
- Trust-based framework
- Deposit-linked structure
KB Kookmin Bank has filed trademark applications for its stablecoin designs.
South Korea in the Global Stablecoin Race
Global Trends
- Russia: Expanding digital ruble pilot.
- Abu Dhabi: Launching dirham-pegged stablecoin.
- U.S.: Major banks exploring Treasury-backed stablecoins.
South Korea aims to reduce reliance on foreign cryptocurrencies while balancing innovation and economic security.
Key Developments Summary
| Key Aspect | Details |
|---|---|
| Issuing Banks | KB Kookmin, Shinhan, Woori, Nonghyup, and others |
| Backing | 1:1 Korean Won reserves |
| Potential Launch | Late 2025–early 2026 (pending regulatory approval) |
| Issuance Models | Trust-based framework, deposit-linked structure |
Future of Stablecoins
Emerging Trends
- Regulatory clarity: Frameworks for AML and financial stability.
- Interoperability: Seamless integration with traditional finance.
- Institutional adoption: Growing interest from investors.
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FAQs
1. What is a won-pegged stablecoin?
A cryptocurrency backed 1:1 by Korean Won reserves, ensuring price stability.
2. How will South Korea regulate stablecoins?
Through phased oversight, starting with banks and expanding to fintech firms if proven secure.
3. What risks do stablecoins pose?
Potential capital flight and reduced central bank control over monetary policy.
4. Which banks are leading this initiative?
KB Kookmin, Shinhan, and Woori are among the eight collaborating institutions.
5. When will the stablecoin launch?
Expected late 2025 or early 2026, pending regulatory approval.
6. How does South Korea’s approach compare globally?
Similar to efforts in Russia and the UAE, but with a focus on reducing dollar dependency.
Stablecoins represent a transformative shift in digital finance, combining innovation with regulatory challenges. South Korea’s cautious yet ambitious approach highlights its commitment to balancing economic security with technological advancement.