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Korean Won Stablecoin Battle Begins: Who Will Take the Lead—Banks, Tech, or Innovators
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With the global development of digital currencies and blockchain technology, stablecoins—an essential component of the digital economy—are rapidly entering the regulatory and commercial spotlight across various countries. South Korea, a key hub for fintech innovation in Asia, is now witnessing a full-scale race to develop Korean won-pegged stablecoins. This article provides an in-depth analysis of the latest moves by South Korean banking alliances, tech giants, and Web3 companies, exploring who may lead this wave of digital currency transformation.
1. Policy Landscape: Stablecoins Enter the Regulatory Spotlight
Following the introduction of the Virtual Asset User Protection Act in 2023, South Korean regulators have made it clear that stablecoins, particularly those pegged to the Korean won, will be treated as a high-priority category for regulation. This policy shift stems from several key factors:
- The Aftermath of the Terra Collapse: The 2022 LUNA and UST incident caused significant losses for South Korean users. In response, regulators have mandated that all stablecoin projects implement transparent, auditable reserve mechanisms.
- Rising Need for Payment Security and Systemic Risk Control: Stablecoins are increasingly seen as viable tools for payments, savings, and cross-border transfers. Without regulation, they may pose risks to the financial system.
- Support for Fintech and Blockchain Innovation: Despite regulatory caution, the South Korean government remains open to stablecoins playing a role in future fintech development and seeks to attract compliant projects and foreign investment.
The stablecoin regulatory draft released in June 2025 marks a major turning point for the market. The government is actively advancing legislation for the Digital Asset Basic Act, which officially supports the issuance of won-pegged stablecoins by licensed entities. This provides a solid legal and policy foundation for the sector. The period from late 2025 to early 2026 is expected to be a critical phase for the explosive growth of Korean Won stablecoins.
A well-regulated environment is likely to boost market confidence, attract increased investment from financial institutions and innovative companies, and accelerate the adoption of stablecoins in payment settlements, cross-border remittances, and the broader digital finance ecosystem.
2. Regulatory Compliance and Stability: Building the Core Force Behind Korean Won Stablecoins
According to the latest draft regulatory framework, South Korea has set a high bar for stablecoin issuance, emphasizing a dual objective of financial compliance and technological control. Key aspects include:
2.1 Clear Qualification Criteria for Issuers
Only institutions that meet the following requirements are eligible to apply for Korean won stablecoin issuance:
- Must have a financial institution background or be certified by financial regulators.
- Must ensure 100% reserve backing (reserves must be in cash or short-term government bonds).
- Must conduct daily or weekly audits and publicly disclose the composition of reserve assets.
- Must open a local bank custodial account and allow real-time regulatory access.
2.2 Strengthened Compliance Obligations for Trading Platforms
- Stablecoins are prohibited from being listed on unlicensed exchanges.
- Exchanges must provide interfaces that ensure transparency of trading records.
- In the event of price depegging, platforms are required to issue alerts and restrict trading.
2.3 Ban on Misleading Marketing and False Claims of Stability
- The use of terms like “stablecoin” or “won-pegged” is prohibited without prior regulatory approval;
- Projects found misleading users will be delisted immediately, and those responsible may face administrative or criminal penalties.
This regulatory framework rivals those of the Monetary Authority of Singapore (MAS) and Hong Kong Monetary Authority (HKMA), reflecting South Korea’s dual goals of risk containment in stablecoin issuance and strategic guidance for Web3 development.
3. Banks, Tech Giants, and Web3 Companies Enter the Race
3.1 Banking Alliances: Cautious Progress with Regulatory Compliance First
Following the policy announcement, South Korean banks responded swiftly. Multiple banking groups have already registered or applied for trademarks and filings related to “KRW Stablecoin.” Examples include:
- Major institutions such asIBK Industrial Bank of Korea, Shinhan Financial Group, and Hana Bank have formed compliant stablecoin development teams.
- Fintech-backed payment platforms like Kakao Pay and Toss are exploring models that integrate stablecoins with e-commerce and gaming payments.
- KB Bankis reportedly collaborating with Korean blockchain firm ICON on a technical sandbox to test scenarios combining won-pegged mechanisms, on-chain clearing/settlement, and financial regulatory integration.
These banks are not only responding to compliance requirements, but also eyeing the long-term potential of domestic stablecoins in local payments, cross-border remittances, and Web3-integrated settlements.
3.2 Tech Giants Kakao Pay and Kaia: Dual Engines of Payment and Public Blockchain
South Korea’s leading mobile payment provider Kakao Pay is accelerating its stablecoin initiatives, submitting multiple trademark applications to the Korean Intellectual Property Office featuring keywords such as “KRW,” “K,” and “P.” These filings span virtual asset trading, electronic transfers, and financial intermediary services.
Behind Kakao Pay is the Kaia public blockchain, a network jointly developed by Kakao subsidiary Ground X and LINE’s blockchain arm Finschia. The project aims to enable cross-chain connectivity across 250 million users of KakaoTalk and LINE, advancing an integrated ecosystem of blockchain, social communication, and payments. KaiaChain’s chairman has publicly stated that the network will support comprehensive issuance of Korean won stablecoins on its mainnet, positioning itself as a new digital asset infrastructure.
3.3 Web3 Innovators: Agile Strategies and Multi-Scenario Applications
Web3-native companies like Nexus have launched a Korean won stablecoin called KRWx, secured related trademarks, and are actively expanding into international on-chain markets. Meanwhile, legacy payment companies such as Danal are reviving their digital asset strategies by leveraging their mature POS and clearing systems to support stablecoin applications in offline payments and consumer transactions. These firms emphasize technological innovation and ecosystem integration, responding flexibly to market demand and showing strong potential in niche sectors such as cross-border payments and DeFi use cases.
4. Three Potential Application Scenarios for Korean Won Stablecoins
Based on the current regulatory framework and market developments, Korean won stablecoins are expected to gain traction in the following key areas:
4.1 Web3 Gaming and Virtual Asset Payments
Leveraging South Korea’s robust gaming industry and active NFT market, Korean won stablecoins could serve as on-chain currency for point systems or in-game item transactions. This would enhance compliance and increase user retention within gaming ecosystems.
4.2 E-Commerce and Cross-Border Payments
Integrated with Korea’s established KYC infrastructure, Korean won stablecoins have the potential to enable fast payments across East Asia, including remittance corridors to Japan, Taiwan, and Hong Kong. This could support global expansion of Korean brands by offering a stable and efficient payment solution.
4.3 Interbank Settlement and Embedded DeFi
Some banks are piloting the use of stablecoins for interbank clearing, aiming to bridge traditional internal banking systems with on-chain assets. This would create blockchain-based alternatives for B2B settlements and foreign exchange flows.
Despite the clear regulatory direction and promising outlook, several challenges remain:
Technical and financial audit integration is complex: Banks must collaborate closely with blockchain teams to build verifiable and regulator-friendly reserve systems.
High capital barriers for issuance: Startups may struggle to enter the space, potentially leading to an oligopolistic stablecoin market.
Legal enforcement gaps persist: Some overseas platforms may continue to offer services for unapproved won-pegged stablecoins, making full regulatory control difficult.
5. A New Frontier in Digital Currency Amid Multilateral Competition
The introduction of stablecoin regulations marks a significant step in completing South Korea’s digital asset policy framework. It not only enhances investor asset protection but also provides a clear entry signal for banks and innovative projects. From a global perspective, South Korea is striving to build a comprehensive ecosystem combining compliant stablecoins, institutional support, and auditable technological implementation. This race is not only about financial innovation—it is poised to drive the development of Korea’s digital economy and elevate its competitiveness in international payments. Whoever takes the lead may well set the tone for the global stablecoin landscape—making this a development worth close attention.
As a leading global digital asset trading platform, MEXC is closely monitoring the progress of Korean stablecoin initiatives. MEXC is committed to providing high-quality trading and liquidity services to compliant stablecoin projects, supporting their rapid adoption and growth in global markets. With its extensive ecosystem resources and technological strengths, MEXC is becoming a vital bridge between innovative projects and users worldwide.
Disclaimer: The information provided in this material does not constitute advice on investment, taxation, legal, financial, accounting, or any other related services, nor does it serve as a recommendation to purchase, sell, or hold any assets. MEXC Learn offers this information for reference purposes only and does not provide investment advice. Please ensure you fully understand the risks involved and exercise caution when investing. MEXC is not responsible for users' investment decisions.