Tether in Talks with South Korea's Biggest Banks for KRW-Pegged Stablecoin

Tether executives have begun talks with South Korea's largest banks to develop a KRW-pegged stablecoin. Discussions with Shinhan Bank, KEB Hana, and Woori Bank have been held, with KB Kookmin Bank also scheduled to meet. The stablecoin's launch hinges on the outcome of a parliamentary committee's decision on whether banks or tech firms should be allowed to issue stablecoins. A consortium of banks may launch a Korean won-based stablecoin by 2026.

Tether executives have initiated talks with South Korea's largest banks to develop a KRW-pegged stablecoin. Discussions with Shinhan Bank, KEB Hana, and Woori Bank have already taken place, with KB Kookmin Bank scheduled to meet next. The stablecoin's launch depends on the outcome of a parliamentary committee's decision on whether banks or tech firms should be allowed to issue stablecoins. A consortium of banks may launch a Korean won-based stablecoin by 2026 .

These discussions come as South Korea strengthens its regulatory framework for stablecoins, mandating 100% reserve backing and dual oversight by the Financial Services Commission (FSC) and the Bank of Korea (BoK). The goal is to bolster financial sovereignty and reduce reliance on USD-pegged tokens like Tether and USDC .

The introduction of a KRW-pegged stablecoin by Tether, if approved, could enhance cross-border transactions and financial stability. It would provide a digital asset that mirrors the value of the South Korean Won, offering a stable medium for transactions and savings in the crypto space. This stability can reduce risks associated with price fluctuations, making digital payments and remittances more predictable.

The regulatory environment in South Korea is evolving rapidly. The Digital Asset Basic Act (DABA) and the Virtual Asset User Protection Act (VAUPA) have introduced stringent reserve management standards, mandating full collateralization and third-party audits for stablecoin issuers . This dual oversight creates a layered regulatory environment, where compliance with both AML/KYC protocols and reserve transparency standards becomes non-negotiable for market participants.

Cross-border crypto exchanges and liquidity providers must navigate these new compliance complexities. Upbit, one of the largest crypto exchanges in South Korea, has adapted by forming partnerships with local fintechs like Naver Pay to launch KRW-stablecoins and mitigate the "kimchi premium" . This strategic alignment not only mitigates regulatory risks but also positions these exchanges to capitalize on South Korea’s growing appetite for digital assets.

The launch of a KRW-pegged stablecoin by Tether, if successful, could significantly impact the South Korean crypto market. It would provide an alternative to existing stablecoins and potentially enhance the overall stability of the digital asset ecosystem. However, the regulatory landscape remains uncertain, and the outcome of the parliamentary committee's decision will be crucial in determining the future of this initiative.

References:
What Are South Korea's New Stablecoin Regulations? [https://www.onesafe.io/blog/south-korea-stablecoin-regulations-cross-border-payments]
Tether executives engage South Korean banks for KRW-pegged stablecoin development [https://bitcoinworld.co.in/won-backed-stablecoin-giwa-chain/]