South Korea's Mega-Banks Unite for Won-Pegged Stablecoin Launch

By: Eliza Bennet

In a historic move, South Korea is on the threshold of significant digital transformation as its eight largest banks collaborate to introduce a stablecoin backed by the Korean won. This consortium, comprising KB Kookmin, Shinhan, Woori, NH Nonghyup, Industrial Bank of Korea, Suhyup, Citibank Korea, and Standard Chartered First Bank, marks the country's first unified effort aimed at launching a regional stablecoin by early 2026. The initiative is designed to mitigate the rising dominance of dollar-pegged stablecoins, which recently witnessed a staggering market volume of approximately $41.6 billion during the first quarter of 2025.

South Korea’s effort, guided by the Open Blockchain & DID Association and overseen by the Financial Supervisory Service (FSS), represents a strategic step to reclaim monetary sovereignty. Despite the competitive headwinds from foreign stablecoins, the proposed Korean-won stablecoin intends to establish a robust monetary alternative in digital transactions. Anchored within a dual model framework, two versions of the digital currency will be piloted. One will leverage a client-fund-backed trust structure, while the other will be directly affiliated with bank deposits, aiming to gauge trust and scalability.

The undertaking has elicited cautious yet positive feedback from the Bank of Korea (BOK), favoring a regulated banking approach versus non-traditional fintech entities in issuing these stablecoins. This sentiment follows South Korea's heightened awareness of cryptocurrency-related risks, exacerbated by the Terra-Luna collapse in 2022, which underscored the necessity for transparent, risk-assessed financial products.

Globally, South Korea’s stablecoin initiative is viewed as a defensive yet proactive measure, paralleling movements by Japan and the European Central Bank in stabilizing their currencies amidst the growing digital asset domain. Although skeptics posit this as a reactionary measure, others are hopeful it could position the Korean won for significant roles in gaming industries and cross-border remittances, offering a decisive edge in shaping future transaction frameworks. As South Korea moves forward, it aims to integrate the stablecoin into commercial applications, potentially informing its long-term central bank digital currency (CBDC) strategies.