South Korea's Banks Race to Embrace Stablecoin Future

Tether and Circle, the two largest stablecoin issuers, have begun engaging with South Korea’s top banks to accelerate the adoption of stablecoins in the region. As part of these efforts, Tether’s USDT and Circle’s USDC are being positioned as key instruments to facilitate digital currency integration, particularly for cross-border transactions and financial services. This development follows a broader global trend where stablecoins are increasingly being considered as a viable alternative to traditional banking infrastructure.

South Korea’s regulatory landscape is evolving to accommodate the growing interest in stablecoin adoption. Lee Kwang-jae, a former Secretary-General of the South Korean National Assembly and current professor at Myongji University, has emphasized the importance of allowing KRW-pegged stablecoins to be traded on international platforms like Binance and Coinbase to boost global demand. He also advocates for opening domestic exchanges such as Upbit and Bithumb to foreign traders, which would allow non-residents to access and trade these stablecoins more freely. Current regulations require South Korean crypto exchanges that handle fiat-crypto transactions to link accounts to real-name verified bank accounts, effectively excluding foreign users. Lee argues that relaxing these rules is essential for KRW stablecoins to gain international acceptance and utility.

The potential for stablecoin adoption in South Korea is further supported by the involvement of major financial institutions and corporate players. Tether and Circle have partnered with local banks to explore the technical and regulatory frameworks necessary for the widespread use of stablecoins. These partnerships aim to integrate stablecoins into existing financial systems while ensuring compliance with both domestic and international standards. The collaboration between non-bank issuers and traditional banks is seen as a key step in bridging the gap between legacy finance and emerging digital currency infrastructure.

Circle’s USDC, which is backed by U.S. dollars and short-term U.S. Treasuries, has been gaining traction due to its transparency and regulatory compliance. Unlike Tether, which has faced scrutiny over its reserve composition and auditing practices, USDC provides monthly attestations from independent auditors to verify its reserves. This transparency has made USDC a preferred choice among institutional and conservative investors who are wary of the regulatory risks associated with USDT. However, Tether remains dominant in terms of market capitalization and liquidity, particularly on Layer-1 and Layer-2 blockchain platforms.

The South Korean government is also considering legislation to facilitate the creation and use of KRW-pegged stablecoins. While political discussions have slowed progress, officials like Lee Kwang-jae stress that regulatory clarity is necessary to unlock the full potential of stablecoins. The government’s focus on developing a legal framework that supports digital currencies reflects a broader global movement toward recognizing stablecoins as legitimate financial instruments.

As stablecoins continue to gain traction, they are expected to play a significant role in reshaping financial services in South Korea and beyond. Their potential to streamline cross-border payments, reduce transaction costs, and enhance financial inclusion has attracted attention from both traditional and fintech players. For now, the regulatory and market conditions will determine how quickly these innovations can be adopted at scale.

Source: [1] Your Paycheck in Stablecoins? That's Local Banks' Worst ... (https://www.bloomberg.com/news/articles/2025-09-08/stablecoins-like-tether-usdc-have-small-banks-businesses-worried) [2] Better Stablecoin Buy: Tether (USDT) vs. USD Coin (USDC) (https://www.fool.com/investing/2025/09/03/better-stablecoin-buy-tether-usdt-vs-usd-coin-usdc/) [3] South Korean KRW Stablecoins Must Trade on Binance (https://finance.yahoo.com/news/ex-national-assembly-chief-south-233000470.html)