The South Korean financial landscape is undergoing a significant transformation with the emergence of KRW-pegged stablecoins. Driven by political support and regulatory advancements, major players from traditional banking, tech giants, and Web3 enterprises are entering the arena. This article explores the key participants, their strategies, and the potential impact on the digital finance ecosystem.
The Banking Consortium Takes the Lead
The Bank of Korea (BOK) has expressed cautious optimism regarding stablecoins. While recognizing their potential for innovation in fintech, the central bank remains concerned about their impact on monetary policy and foreign exchange controls. Senior Deputy Governor Ryoo Sang-dai emphasized that KRW stablecoins should be introduced gradually, initially by strictly regulated commercial banks before expanding to non-banking institutions.
In response, a consortium of eight major banks is preparing to launch a joint stablecoin project. Participants include:
- KB Kookmin Bank
- Shinhan Bank
- Woori Bank
- NH NongHyup Bank
- Industrial Bank of Korea
- Suhyup Bank
- Citibank Korea
- Standard Chartered Korea
The project is coordinated with the Open Blockchain and Decentralized Identifier Association (OBDIA) and the Korea Financial Telecommunications and Clearings Institute (KFTC). Two issuance models are under consideration: a trust-based model where customer funds are held in reserve before stablecoin issuance, and a deposit token model where stablecoins are directly linked to bank deposits. The consortium aims to establish a joint venture by late 2025 or early 2026.
KB Kookmin Bank, South Korea’s largest retail bank, is leading the initiative. It has already applied for trademarks including "KBKRW," "KRWKB," "KBST," and "KRWST," marking the first major move by a traditional bank into the stablecoin space. Shinhan Bank, another retail leader, has been exploring blockchain applications since 2021, including a pilot KRW stablecoin project with Hedera and participation in cross-border remittance experiments.
Other consortium members bring specialized expertise: Woori Bank and NH NongHyup Bank have experience in international payments and CBDC testing, while Industrial Bank of Korea focuses on SME financing. Citibank Korea and Standard Chartered Korea offer international clearing and liquidity support.
Kakao Pay and Kaia: Tech Giants Enter the Fray
Kakao Pay, South Korea’s leading mobile payment platform, is aggressively pursuing stablecoin opportunities. With over 60% market penetration in QR payments, P2P transfers, and e-commerce settlements, Kakao Pay holds a position comparable to Alipay or WeChat Pay in China. Following President Lee Jae-myung’s pro-crypto stance, Kakao Pay’s stock surged nearly 30%, and the company filed 18 trademark applications for KRW-linked stablecoins, such as "KRWKP" and "KWRP."
Kakao Pay plans to leverage its ecosystem, including Kakao Bank and Kakao T, to integrate stablecoins into social, payment, and financial services. Its collaboration with Kaia, an EVM-compatible Layer 1 blockchain formed by the merger of Klaytn (Kakao’s Ground X) and Finschia (LINE’s subsidiary), aims to connect Kakao Talk and LINE’s 250 million users. Kaia has already integrated USDT and partnered with Tether, laying the groundwork for KRW stablecoin issuance.
Sam Seo, Chairman of KaiaChain, announced plans to "fully promote KRW stablecoin issuance" on Kaia, signaling the beginning of a "stablecoin summer." The synergy between Kaia’s blockchain infrastructure and Kakao Pay’s payment network positions them to dominate the market once regulations are finalized.
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Danal: Reviving PayCoin for Stablecoins
Danal, a veteran payment service provider, previously launched PayCoin (PCI) in 2019, attracting over 1 million users before regulatory hurdles forced a pause. With the upcoming Digital Asset Basic Act, Danal is revitalizing its digital currency efforts. The company has filed patents for POS terminals capable of processing virtual asset payments, indicating preparations for stablecoin integration.
Danal’s extensive POS network and payment清算系统 provide a natural advantage for stablecoin adoption. Its terminals can directly recognize and settle on-chain tokens, simplifying user payments, while backend systems support off-chain reserve management and compliance auditing.
Nexus: A Startup’s Ambitious Global Vision
Blockchain startup Nexus aims to be the first KRW stablecoin issuer. It has already launched KRWx on BNB Chain and filed trademarks for USDx, JPYx, and EURx. CEO Jang Hyun-guk emphasized that "the raison d'être of stablecoins is practicality" and their role in globalizing the digital economy.
Nexus plans to establish a Hong Kong subsidiary, Nexus Stable HK, to leverage the region’s legal and market advantages for international expansion. Its pre-emptive issuance of KRWx seeks to establish first-mover advantage in a competitive landscape.
Other Potential Players
Samsung SDS and LG CNS are poised to become key infrastructure providers. Samsung SDS’s Nexledger, a mature enterprise blockchain solution, offers traceability, reliability, and auditability—essential features for stablecoin issuance. Similarly, LG CNS, selected by the BOK to develop the wholesale CBDC and tokenized deposit system, possesses core capabilities in minting, clearing, and custody.
As the Digital Asset Basic Act progresses, these companies are well-positioned to support private stablecoin issuance through technical expertise and existing infrastructure.
Frequently Asked Questions
What is a KRW stablecoin?
A KRW stablecoin is a digital currency pegged to the South Korean won, designed to maintain a stable value relative to the fiat currency. It combines the benefits of blockchain technology with the reliability of traditional finance.
How are KRW stablecoins regulated?
The Digital Asset Basic Act, currently under review, will provide a legal framework for private issuance of KRW stablecoins. The Bank of Korea and financial authorities are developing guidelines to ensure stability and compliance.
What are the use cases for KRW stablecoins?
Use cases include remittances, e-commerce payments, DeFi applications, and cross-border transactions. They offer lower fees and faster settlement compared to traditional methods.
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Which companies are leading in KRW stablecoin development?
Major banks like KB Kookmin and Shinhan are forming a consortium, while tech firms like Kakao Pay and startups like Nexus are pursuing independent initiatives. Infrastructure providers like Samsung SDS and LG CNS also play a critical role.
How do KRW stablecoins impact the financial system?
They promote financial innovation and efficiency but require careful regulation to prevent risks to monetary policy and foreign exchange controls. Gradual introduction by regulated entities is recommended.
What is the timeline for KRW stablecoin adoption?
The market is expected to experience significant growth between late 2025 and mid-2026, following the enactment of the Digital Asset Basic Act and the establishment of regulatory frameworks.