In South Korea, eight major banks have united to create a stablecoin pegged to the local currency, the won, in response to the growing influence of dollar stablecoins.
Union of South Korean Banks
According to a June 25 report from Economic Review, eight leading banks, including KB Kookmin, Shinhan, Woori, and others, have joined forces in a new initiative led by the Open Blockchain Association and the Financial Settlement Institute. The goal of the group is to launch a won-backed stablecoin, aligning with the country's broader regulatory push to modernize its financial infrastructure.
Potential Issuance Models for the Stablecoin
The banking consortium is evaluating two potential issuance models for the stablecoin: a trust-based framework and a deposit-linked system. Both models are designed to ensure full 1:1 backing with the South Korean won, ensuring stability and user confidence. While technical and regulatory specifics are still under review, the launch is tentatively scheduled for late 2025 or early 2026, pending regulatory approval.
Role of the Stablecoin in the Country's Financial System
Some lawmakers in South Korea are advocating for an accelerated rollout of government-issued won-pegged stablecoins, viewing them as strategic tools to enhance the status of the Korean won in both domestic and global markets. This highlights a pivotal shift in South Korea’s digital finance landscape, with the won-backed stablecoin emerging as a potential counterweight to the global dominance of dollar-based crypto assets.
The creation of a won-backed stablecoin illustrates South Korea's commitment to reclaiming control over its domestic digital space and reinforcing the country's financial independence amid growing pressure from dollar assets.
