Upbit Naver Pay Partner for KRW Stablecoin Initiative

South Korean cryptocurrency exchange Upbit is collaborating with payments company Naver Pay to develop a won (KRW) stablecoin initiative. This move comes after the Bank of Korea paused its plans for a central bank digital currency (CBDC), aligning with the current president's support for a won-based stablecoin market. The collaboration aims to create a payments business based on the stablecoin, although specific details remain limited. A stablecoin is a type of cryptocurrency whose value is pegged to a real-life asset, such as the dollar or gold.

The development of a KRW stablecoin is expected to significantly impact local crypto traders, who have faced challenges in moving KRW in and out of the country. These restrictions have led to a large spread and arbitrage opportunities, a situation that has been labeled as the "kimchi premium." The introduction of a KRW stablecoin, if tradable on-chain, would allow traders to swap the stablecoin for USDT or USDC, effectively bypassing fiat restrictions and reducing significant price spreads between South Korean and U.S. exchanges.

According to an unidentified official from Dunamu, Upbit's parent company, the scope and methods of cooperation between Upbit and Naver Pay will be specified once the relevant system is established. This initiative is seen as a strategic move to enhance the efficiency and accessibility of cryptocurrency trading in South Korea, potentially benefiting both local traders and the broader crypto market.