South Korea’s financial landscape is on the brink of a digital transformation as eight major banks join forces to develop a stablecoin pegged to the Korean won. This initiative aims to strengthen the national currency amid rising dominance of dollar-backed digital assets and signals a pivotal step toward mainstream adoption of blockchain technology in traditional finance.
The project involves KB Kookmin Bank, Shinhan Bank, Woori Bank, Nonghyup Bank, KEB Hana Bank (Corporate Bank), Suhyup Bank, Citi Korea, and SC First Bank. Together, these institutions are laying the groundwork for a regulated, bank-issued digital currency that could reshape how value is stored, transferred, and utilized across South Korea’s economy.
Why a Won-Backed Stablecoin Matters
Stablecoins—digital assets designed to maintain a stable value by being pegged to real-world assets—are increasingly central to global finance. According to data from RWA.xyz, the total market capitalization of stablecoins exceeded $239 billion as of June 2025. Notably, 99% of all issued stablecoins are currently tied to the U.S. dollar.
This overwhelming dollar dominance raises concerns about currency dependency and monetary sovereignty. For South Korea—a major export-driven economy with deep international trade ties—the risk of dollarization in digital finance could undermine the role of the won in both domestic and cross-border transactions.
By launching a won-backed stablecoin, these banks aim to ensure that the Korean currency remains competitive in the evolving digital asset ecosystem. The initiative aligns with broader efforts to tokenize real-world assets (RWA) and integrate blockchain into core financial infrastructure.
Project Timeline: Launch Expected by Late 2025 or Early 2026
The stablecoin is expected to go live by the end of 2025 or early 2026, marking one of the first major forays by traditional banks into the digital asset space. Unlike decentralized crypto projects, this effort is institutionally driven and built on regulatory compliance from the outset.
Support for the project comes from key industry and regulatory stakeholders:
- Open Blockchain: A blockchain-focused non-profit advocating for transparent and secure digital finance.
- Decentralized Identity Association: Promoting user-controlled identity solutions in Web3.
- Korea Financial Telecommunications and Clearings Institute (KFTC): The national clearinghouse that will likely oversee transaction settlement and interoperability.
These partnerships underscore the seriousness and scalability of the initiative. The stablecoin is expected to operate under a trust-based model, where each digital token is fully backed by a 1:1 deposit of Korean won in reserve accounts. However, final implementation hinges on formal approval from financial regulators.
Aligning with National Digital Asset Strategy
This banking consortium’s move complements South Korea’s broader legislative push to establish a clear regulatory framework for digital assets. On June 10, 2025, the ruling party introduced the Digital Asset Basic Act, a landmark bill designed to:
- Legally recognize and regulate stablecoin issuance
- Protect investors through transparency requirements
- Foster innovation in blockchain and fintech sectors
- Position South Korea as a leader in Asia’s digital economy
The proposed law could provide the necessary legal foundation for banks to issue and manage stablecoins securely and transparently. It also reflects growing recognition that digital currencies are no longer niche tools but essential components of modern financial systems.
Central Bank Concerns: Balancing Innovation and Control
Despite strong momentum, the project has not been without scrutiny. Rhee Chang-yong, Governor of the Bank of Korea (BOK), voiced caution, warning that won-backed stablecoins could make it easier for individuals to convert local currency into dollar-denominated assets—potentially accelerating capital flight and weakening monetary policy control.
However, Governor Rhee clarified that he does not oppose the concept outright. Instead, he emphasized the need for careful design and oversight to prevent systemic risks.
Echoing this sentiment, Deputy Governor Ryoo Sangdai stated that any rollout should be gradual and bank-led. He argued that licensed financial institutions should be the primary issuers of stablecoins to ensure consumer protection, anti-money laundering (AML) compliance, and financial stability.
This phased approach suggests that while innovation is welcome, regulatory guardrails will remain a priority.
FAQs: Understanding South Korea’s Stablecoin Initiative
Q: What is a won-backed stablecoin?
A: It’s a digital currency pegged 1:1 to the South Korean won, issued by financial institutions and backed by equivalent reserves. It combines blockchain efficiency with fiat stability.
Q: How is this different from existing stablecoins like USDT or USDC?
A: Most popular stablecoins are dollar-pegged and issued by private crypto firms. This project is bank-led, regulation-first, and designed specifically to support the Korean won in digital finance.
Q: Will this replace cash or KRW?
A: No. The stablecoin is intended to complement physical and electronic won, not replace it. It enhances payment efficiency, especially in digital and cross-border contexts.
Q: Is this similar to a central bank digital currency (CBDC)?
A: Not exactly. A CBDC is issued directly by the central bank. This stablecoin would be issued by commercial banks under regulatory supervision—making it a “private-sector digital won” rather than a government-issued one.
Q: Could this lead to faster crypto adoption in South Korea?
A: Yes. By legitimizing blockchain through trusted banks, it lowers barriers to entry and may encourage wider use of digital wallets, DeFi applications, and tokenized assets.
Q: When will the public be able to use it?
A: The target launch window is late 2025 or early 2026, pending regulatory approval and technical readiness.
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Conclusion: A Strategic Move Toward Digital Sovereignty
South Korea’s push for a bank-backed, won-pegged stablecoin represents more than just technological progress—it’s a strategic effort to preserve monetary autonomy in an increasingly dollar-centric digital world. By leveraging institutional trust, regulatory clarity, and blockchain efficiency, the country is positioning itself at the forefront of responsible financial innovation.
As global economies race to define their roles in the tokenized future, South Korea’s collaborative model between banks, regulators, and tech advocates offers a compelling blueprint—one that balances growth with stability, openness with security, and local identity with global connectivity.