In a significant move for the South Korean finance and crypto landscapes, digital asset custodian BDACS has teamed up with prominent financial entity Woori Bank to unveil a groundbreaking stablecoin pegged to the Korean Won (KRW), utilizing the advanced capabilities of the Avalanche blockchain.
Launch of the First KRW-Pegged Stablecoin on the Avalanche Network
The innovative firm BDACS has officially introduced KRW1, the inaugural stablecoin backed by the South Korean won, in collaboration with Woori Bank, a leading player among the nation’s financial institutions.
As indicated in a recent announcement, KRW1 is presently in a testing phase, following a successful proof-of-concept implementation. Each KRW1 token is fully collateralized at a 1:1 ratio with the won secured in an escrow account at Woori Bank.
BDACS aims to leverage this stablecoin as a “cost-effective payment solution for public sector initiatives,” notably in areas such as emergency fund distributions, where it can substantially reduce transaction costs.
Furthermore, KRW1 is positioned as a milestone beyond market trading; according to Avalanche’s social media updates, this stablecoin could set a new technical benchmark for stablecoins within South Korea, especially with upcoming regulatory developments being anticipated.
“BDACS has established a robust framework incorporating systems for issuance and management, alongside a user-centric application designed for peer-to-peer transfers and transaction verification,” the press statement highlighted.
Harry Ryoo, CEO of BDACS, emphasized that they are “creating the infrastructure for the digital asset sector, catering to diverse clients including corporate, institutional, and government organizations. The launch of KRW1 signifies a pivotal moment for our company, and we are confident it will become a cornerstone of the emerging digital economy.”
Anticipation Builds for the Regulatory Framework in October
The introduction of KRW1 precedes significant regulatory developments expected from South Korea’s Financial Services Commission (FSC). Reports suggest that the FSC will soon unveil long-awaited guidelines concerning the issuance and management of won-backed stablecoins.
On August 18, Park Min-kyu, a prominent member of the Democratic Party of Korea, confirmed that legislation is projected to be submitted to the National Assembly in October. He also mentioned receiving updates from the FSC on the evolving direction of stablecoin regulations.
The FSC has been actively working on digital asset regulations to adapt its oversight framework. The establishment of the Virtual Asset Committee in November 2024 signifies a strategic move to structure the regulatory landscape further and finalize the subsequent phases by late 2025.
Numerous legislative proposals regarding the creation and governance of won-pegged stablecoins have been presented in South Korea’s National Assembly, including two competing bills discussed in July from the country’s ruling and opposition parties.
Ahn Do-gil, a member of the Planning and Finance Committee from the Democratic Party, proposed the “Act on the Issuance and Distribution of Value-Stable Digital Assets.” In parallel, Kim Eun-hye from the People Power Party introduced the “Act on Payment Innovation Using Value-Fixed Digital Assets.”
Additionally, Min Byung-deok has put forth the “Digital Assets Basic Act,” aiming to authorize the issuance of won-pegged stablecoins while advocating for the establishment of a Digital Asset Committee under presidential authority.
The banking community is currently evaluating various scenarios for potential regulations, particularly regarding whether non-bank entities can operate as issuers of stablecoins. Notably, major banks in South Korea have engaged in dialogues with Tether and Circle to explore possible collaborations.
According to local sources, leaders from Shinhan Financial Group and Hana Financial Group recently held individual discussions with Heath Tarbert, the president of Circle, along with representatives from Tether. Similarly, KB Financial Group and Woori Bank anticipated meetings with him soon.
