South Korean Banks Plan Won-Pegged Stablecoin Launch by 2026

Eight major South Korean banks are collaborating to launch a stablecoin pegged to the Korean won, marking a significant advancement in the country's digital asset adoption. The project involves prominent institutions such as KB Kookmin, Shinhan, Woori, Nonghyup, Corporate, Suhyup, Citi Korea, and SC First Bank. This initiative aims to counter the growing dominance of dollar-pegged stablecoins, which currently make up 99% of the stablecoin market capitalization.

The banks' goal is to position South Korea as a competitive player in the global digital finance market. The stablecoin project is expected to materialize in late 2025 or early 2026, representing the first major move by traditional banks into the digital asset space. The project has garnered support from the blockchain-focused nonprofit Open Blockchain, the Decentralized Identity Association, and the Korea Financial Telecommunications and Clearings Institute.

The stablecoin will adopt a trust-based model or a 1:1 deposit token scheme, subject to regulatory approval. This initiative aligns with broader legislative efforts to establish a clear regulatory framework for digital assets in South Korea. On June 10, the country's ruling party proposed the Digital Asset Basic Act to facilitate stablecoin issuance and promote the growth of crypto markets.

Bank of Korea Governor Rhee Chang-yong has expressed concerns that the creation of the stablecoin could facilitate easier exchange of the currency for the dollar, potentially hurting the won and complicating the central bank's management of the currency. However, he has not opposed the issuance of a won-pegged stablecoin. Deputy Governor Ryoo Sangdai has advocated for a gradual rollout, with banks being the first entities to issue stablecoins to ensure a safety net.

South Korean banks are taking significant steps in the digital currency landscape with plans to launch a won-pegged stablecoin by 2026. This initiative involves a consortium of eight major commercial banks, including KB Kookmin Bank, which has filed 17 trademarks related to the stablecoin. The consortium aims to introduce the stablecoin as early as late 2025 or early 2026, aligning with the country's ongoing legislative efforts to support stablecoin-related developments.

The stablecoin will be fully backed by the Korean won, ensuring its stability and reliability. The consortium is exploring two initial models for the stablecoin, both of which guarantee complete backing from the local currency. This move is part of a broader strategy to integrate digital currencies into the financial system, with strong government support and fast-tracked legislation facilitating the process.

The Bank of Korea has expressed a preference for a gradual rollout of stablecoins, with banks being the first to issue them. This approach aims to ensure a controlled and regulated introduction of digital currencies, minimizing potential risks and maximizing benefits for the financial ecosystem. The consortium's efforts are expected to contribute to the development of a robust and secure digital currency infrastructure in South Korea, positioning the country as a leader in the global digital currency landscape.