South Korea’s Biggest Banks Form Digital Asset Alliance to Launch KRW Stablecoin and Regain Market Control from USD Tokens

South Korea’s Biggest Banks Unite To Issue Won-Backed Stablecoin Amid Dollar Coin Concerns

A powerful alliance of eight major South Korean banks is moving to launch a stablecoin tied to the Korean won, as the country intensifies efforts to keep foreign dollar-pegged tokens from overtaking its domestic digital economy.

The consortium—comprised of KB Kookmin, Shinhan, Woori, Nonghyup, Industrial Bank of Korea, Suhyup, Citibank Korea, and SC First Bank—will explore the issuance of a won-linked token through two possible models.

Two Issuance Models Under Legal and Technical Review

Banks are currently weighing two frameworks: a trust-based model, which issues tokens backed by separately managed customer funds, and a deposit-linked model that directly mirrors users’ bank deposits on a 1:1 basis.

Both are now under regulatory, legal, and technological examination, with the joint venture expected to take shape by late 2025 or early 2026.

The initiative is being developed in partnership with the Open Blockchain and Decentralised Identity (DID) Association and the Korea Financial Telecommunications and Clearings Institute.

It is also supported by the Financial Supervisory Service, as authorities prepare a broader shift in digital asset governance.

Race to Counter Foreign Stablecoins

The move comes amid growing anxiety within the South Korean banking sector over the rising presence of dollar-backed stablecoins in local markets.

A banking official said,

“There is a shared sense of crisis that if things continue this way, foreign dollar coins could dominate the domestic market.It is time to secure both the independence and competitiveness of the domestic financial system through a won-based digital currency.”

South Korean banks see a window of opportunity to create a domestic alternative that can compete with international stablecoins, especially as the United States moves ahead with federal-level legislation like the GENIUS Act to regulate dollar-based tokens.

President Lee’s Vision Pushes Crypto Agenda Forward

The initiative aligns with newly elected President Lee Jae-myung’s crypto-forward economic vision.

His campaign included clear promises to launch a KRW-pegged stablecoin for both domestic and international use.

In early June, Democratic lawmaker Min Byeong-deok introduced the Digital Asset Basic Act, outlining a licensing framework for stablecoin issuers and requiring a minimum of ₩500 million (approximately $367,890) in owner’s capital.

The proposed law seeks to establish clear rules for stablecoin issuance, paving the way for private sector participation under strict oversight.

It signals a new phase of regulation designed to modernise South Korea’s financial ecosystem and position it competitively on the global stage.

Central Bank Advocates Slow and Steady Approach

While the banking industry gains momentum, the Bank of Korea is maintaining a cautious stance.

Governor Rhee Chang-yong warned that introducing a won-backed token could unintentionally drive up usage of dollar-based coins instead, potentially affecting forex control.

“Issuing Won-based stablecoin could make it easier to exchange them with dollar stablecoin rather than working to reduce use of dollar stablecoin.”

Still, the central bank is not opposed to the idea. Deputy Governor Ryoo Sang-dai suggested that the safest route would be to allow only commercial banks—who already operate under strict regulation—to pilot the model.

“It is desirable to first allow banks, which are under a high level of regulations, to issue (Won-based stablecoins) and gradually expand to the non-bank sector with the experience.”

Ryoo also stressed on the need for strong safety nets to protect users and the financial system.

Why Now and What’s at Stake

Interest in won-linked tokens has escalated sharply following a wave of crypto regulation and enforcement in South Korea.

Banks are not only reacting to policy changes, but to shifting global dynamics.

With players like Amazon expressing interest in digital tokens, and the US setting stablecoin rules, South Korea is positioning its domestic financial institutions as early movers in the next phase of digital finance.

KB Kookmin—the country’s largest bank—has even filed trademark applications for stablecoin-related symbols, suggesting longer-term ambitions beyond local payments.

Is This South Korea’s Moment to Lead in Digital Currency?

The private banking sector stepping into stablecoin territory marks a pivotal shift—one that could challenge centralised CBDC strategies.

By mobilising their trust-based infrastructure and deposit networks, banks are laying the groundwork for a parallel system that aligns with public regulatory goals but isn’t fully driven by them.

If executed with care, the banks’ stablecoin model could offer South Korea both monetary sovereignty and a competitive edge in the digital currency race.

The question now is whether regulators, banks, and tech partners can build trust fast enough to prevent dollar dominance in their own backyard.