- Eight major banks collaborate on a new won-backed stablecoin.
- Project aims to protect local finance from dollar coin inflows.
- Central bank supports phased rollout via regulated institutions.
Eight South Korean banks have launched a new Korean Won-backed stablecoin initiative. The project involves cooperation with blockchain associations and banks. The move marks a strategic leap to improve local digital payment architecture.
This endeavour supports the new trend in South Korea towards wider crypto regulation under the new president, Lee Jae-myung. The government seeks to strengthen national regulation on digital financial systems. Therefore, the banks intend to develop two stablecoin models, namely trust-based and deposit-linked.
Won-Backed Stablecoins to Reduce Dollar Dominance
The new project intends to reduce reliance on dollar-based tokens within domestic transactions. Moreover, it supports financial independence in South Korea’s digital economy. Moreover, the consortium seeks to achieve competitive positions in the global stablecoin market.
The action comes in as the government advocates for changes to embrace innovation in digital assets. The proposed Digital Asset Basic Act introduces the licensing requirements for stablecoin issuers. Also, it establishes capital thresholds to secure operations and the investors.
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Central Bank of Korea Remains Cautious
However, the Bank of Korea has taken a moderate position toward the project. Although it does not rule out the idea, it suggests a gradual and a phased implementation. The central bank focuses on risk management and policy synchronisation in the process.
According to the central bank, early implementation should remain limited to commercial banks. This allows better supervision, compliance and adaptability during the early phase. Moreover, the plan guarantees its financial stability and alignment to the regulations.
Source: X
Deputy Governor Ryoo Sang-dai supports this conservative approach. He pointed out that phased rollout enables the stablecoins to grow in a structured system. The approach reduces systemic risks as well as enables technical and policy improvements over time.
On the one hand, Governor Rhee Chang-Yong expressed fear about unforeseen effects. He warned that won-backed tokens could drive additional cross-exchange demand for dollar-based stablecoins. That outcome could challenge South Korea’s forex control and monetary independence.
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Increased Demand for Won-Backed Stablecoins
However, banks continue to collaborate on the digital currency launch. The move reflects the increased need for innovation before foreign stablecoins dominate the local market. These banks aim to create a robust and user-oriented payment network.
The Won-backed stablecoin project also demonstrates South Korea’s position in the global digital finance race. The participation of regulated institutions makes the launch of Won-backed stablecoins more credible. It also positions South Korean banks as one of the pioneers in terms of blockchain-based payments
Regulators have expressed support for innovations but also establish financial protection. They require clear frameworks, risk procedures and capital support of any new token issuer. Consequently, the ecosystem is being developed with in-built monitoring and user protection.
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