South Korea's Banks Plan KRW-Backed Stablecoin by 2026

South Korea's leading banks, including KB Kookmin Bank and Shinhan Bank, have announced a collaborative effort to launch a stablecoin backed by the Korean Won (KRW) by early 2026. This initiative aims to challenge the dominance of US dollar-pegged stablecoins and foster local financial sovereignty. The project, which involves the Open Blockchain and Decentralized Identity Association, focuses on creating digital KRW rails and seeks regulatory approval to address the current dominance of USD stablecoins in South Korea.

The stablecoin is expected to impact local liquidity and payment infrastructures without directly affecting major cryptocurrencies like Bitcoin or Ethereum. This move could reshape South Korea's digital economy and alter current financial ecosystems. The government and the Bank of Korea are advising caution in the regulatory process to ensure effective management and regulation.

Bank executives aim to leverage real-world asset tokenization to integrate KRW into decentralized finance (DeFi). This move could elevate South Korea's digital finance status globally. The stablecoin launch coincides with the Digital Asset Basic Act, which supports stablecoin issuance and aids technological growth, resulting in increased local and international scrutiny.

Eight of South Korea’s leading banks, including KB Kookmin, Shinhan, Woori, NongHyup, Suhyup, Citibank Korea, Standard Chartered Korea, and Industrial Bank of Korea, have announced plans to collaborate on the issuance of a stablecoin backed by the Korean Won (KRW). This initiative is a significant step towards establishing a domestic digital currency that can compete with existing dollar-denominated stablecoins. The banks have partnered with the Open Blockchain and Decentralized Identifier Association (OBDIA) and the Korea Financial Telecommunication and Clearings Institute (KFTC), which is the backbone of South Korea’s interbank payments system. This collaboration suggests that the project is considering international payment and remittance via Won-backed stablecoins, which are currently dominated by foreign stablecoins.

One of the banking officials highlighted the urgency of the situation, stating, “There is a shared sense of crisis that if things continue this way, foreign dollar coins could dominate the domestic market.” The official further emphasized the need to secure both the independence and competitiveness of the domestic financial system through a won-based digital currency. The regulatory framework for this initiative is still under review and is expected to be finalized by the end of 2025 or early 2026. However, the legal direction is already clear with the Digital Asset Basic Act (DABA) serving as the legislative green light. The banks are exploring both trust-based issuance and deposit-token models, aligning with DABA’s framework for stablecoin authorization. The stablecoin bill was introduced under the new pro-crypto President Lee Jae-myung, and the stablecoin use case is the main difference between DABA and the U.S. GENIUS bill. While DABA aims to protect financial sovereignty, aid remittance, and curb U.S. dollar dominance, the GENIUS Act seeks to maintain the dollar as the world’s reserve currency.

In preparation for the joint banking collaboration, the country’s largest bank, Kookmin, has already applied for 17 stablecoin trademarks. Another payment provider, Kakao Pay, made a similar application recently, prompting the bank’s move. Notably, KakaoBank, another affiliate, filed 12 trademarks just days earlier, including names like BKRW and KRWB. A KB Kookmin official acknowledged the move as preparation for the joint banking collaboration and said, “We registered the trademarks as a priority in order to dominate the trademark rights…The banking sector is forming a joint council, so we are preparing preemptively in line with that.”

This initiative by South Korean banks is part of a broader trend in the region to embrace digital currencies and blockchain technology. The issuance of a KRW-backed stablecoin is a significant development in the digital currency landscape, as it provides a stable and regulated alternative to existing stablecoins. This initiative is expected to have a positive impact on the digital economy, as it will facilitate faster and more secure transactions, while also reducing the risks associated with volatile digital currencies. The banks' collaboration is a testament to their commitment to innovation and their efforts to stay ahead of the curve in the rapidly evolving digital landscape.