South Korea Pushes Won Stablecoin After $115B Move to Dollar-Backed Tokens

• South Korea is pushing a won-pegged stablecoin after $115B flowed into dollar-backed tokens, raising FX and policy concerns.

• The Bank of Korea favors a bank-led rollout with strict oversight, warning of risks to monetary stability and reporting compliance.

• Competing KRW stablecoin projects emerge as regulators weigh flexible frameworks amid strong domestic crypto demand.

South Korea is accelerating plans for a won-pegged stablecoin after about $115 billion moved into dollar-backed tokens in 2025. Regulators, banks, and fintech firms are now shaping competing models ahead of a Digital Asset law expected this quarter. According to the Bank of Korea, the move responds to rising stablecoin use and cross-border capital concerns.

Central Bank Urges Controlled Rollout Framework

Notably, the Bank of Korea described won stablecoins as “currency-like substitutes” requiring strict oversight. It warned that unchecked issuance could disrupt monetary policy and foreign exchange stability. The bank also raised concerns about potential circumvention of reporting rules tied to cross-border transactions.

Moreover, the central bank said non-bank issuance could conflict with Korea’s separation of banking and commerce. It proposed allowing banks to lead initial issuance under existing regulatory standards. Expansion to other entities, however, should follow only after formal risk reviews.

Competing Projects and Infrastructure Emerge

Meanwhile, private sector activity continues despite regulatory uncertainty. TokenSquare launched KRWQ, a won-based payment infrastructure built on BSV blockchain technology. The system targets real-time payments, enterprise settlement, and AI-driven transactions.

According to TokenSquare CEO Oh Eun-jung, the platform focuses on large-scale payment processing rather than trading use. The project includes compliance tools such as KYC and AML controls, along with custody support from Korea Digital Asset.

At the same time, a separate KRWQ stablecoin exists on EDX Markets, developed by IQ and Frax Finance. That version targets institutional trading and hedging tied to offshore non-deliverable forward markets exceeding $100 billion.

Policy Divide Shapes Next Phase

However, regulators remain divided on control structures for stablecoins. According to Andrei Grachev of DWF Labs, the Bank of Korea favors bank-led models with majority ownership. In contrast, the Financial Services Commission is reviewing a more flexible approach aligned with Europe’s MiCA framework.

Despite this, market demand continues to grow. Tiger Research CEO Kim Gyu-jin said offshore KRWQ trading reached about one billion won daily at times. South Korea also has about 18 million crypto investors, reflecting strong domestic participation in digital asset markets.