South Korea’s Leading Banks Team up on Korean Won Stablecoin Venture

Eight of South Korea’s major commercial banks are joining forces to introduce a joint venture aimed at issuing a Korean won-based stablecoin. The move signifies the banking sector’s formal entry into the digital asset area, as the nation positions itself to compete in an international market currently dominated by United States dollar-backed stablecoins.

Participating institutions include KB Kookmin, Shinhan, Woori, Nonghyup, Hana, Suhyup, Citibank Korea, and Standard Chartered First Bank. According to reports, the consortium is working with the Open Blockchain and Decentralized Identity (DID) Association and the Korea Financial Settlement Service to build the structure for the stablecoin effort. This is the first time South Korean banks have formed a group to directly engage with cryptos and digital assets.

Although a final issuance model has not yet been determined, two methods are under review. This includes a trust-based model, where client funds are held before coins are issued, and a deposit token model, which pegs released tokens 1:1 to existing bank deposits. The banks are currently establishing a shared infrastructure, with plans to potentially establish the joint company by late 2025, pending regulatory clarity.

This aligns with the proposed Basic Digital Asset Act, which has laid down a framework for stablecoin regulation and is under consideration in the National Assembly. A second-phase roadmap for virtual asset regulation, including stablecoins, is expected from the Financial Services Commission later this year.

While this initiative is separate from the central bank’s digital currency (CBDC) project, observers are closely monitoring for potential synergies or conflicts between the two. Market experts suggest the initiative could help South Korea assert digital financial independence and reduce reliance on foreign-issued stablecoins. If successful, the stablecoin could be used in cross-border remittances, domestic payments, and emerging Web3 financial services.

However, challenges around regulatory approvals, consumer protections, and building public trust still persist. A senior banking official remarked, “There’s a growing concern that without a domestic alternative, foreign stablecoins could dominate our digital financial landscape. This project is about securing competitiveness and sovereignty in the era of digital finance.”

This move comes following reports that South Korea had been intensifying discussions on Won-based stablecoins. Bank of Korea Governor Lee Chang-yong recently attended a dinner meeting with bank executives on June 23, where stablecoin-focused discussions were anticipated.