Eight of South Korea’s major commercial banks are joining forces to launch a joint venture aimed at issuing a Korean won-based stablecoin. The move signals the banking sector’s formal entry into the digital asset space, as the country positions itself to compete in a global market currently dominated by US dollar-backed stablecoins.
South Korea Progresses With Stablecoin Initiatives
Participating institutions include KB Kookmin, Shinhan, Woori, Nonghyup, Hana, Suhyup, Citibank Korea, and Standard Chartered First Bank. As per reports, the consortium is working with the Open Blockchain and Decentralized Identity (DID) Association and the Korea Financial Settlement Service to build the foundation for the stablecoin initiative.
This is the first time South Korean banks have formed a group to directly engage with cryptos and digital assets.
Even though a final issuance model has not yet been determined, two approaches are under review. This includes a trust-based model, where customer funds are held before coins are issued, and a deposit token model, which pegs issued tokens 1:1 to existing bank deposits.
The banks are currently developing a shared infrastructure, with plans to potentially establish the joint company by late 2025, pending regulatory clarity. This aligns with the proposed Basic Digital Asset Act, which has laid down a framework for stablecoin regulation and is under consideration in the National Assembly. A second-phase roadmap for virtual asset regulation, including stablecoins, is expected from the Financial Services Commission later this year.
While this effort is separate from the central bank’s digital currency (CBDC) project, observers are watching closely for potential synergies or conflicts between the two.
Industry experts say the initiative could help South Korea assert digital monetary independence and reduce dependence on foreign-issued stablecoins. If the talks turn successful, the stablecoin could be used in cross-border remittances, domestic payments, and emerging Web3 financial services. But, challenges around regulatory approvals, consumer protections, and building public trust still persists.
A senior banking official noted, “There’s a growing concern that without a domestic alternative, foreign stablecoins could dominate our digital financial landscape. This project is about securing competitiveness and sovereignty in the era of digital finance.”
This move comes a week after South Korea had reportedly been intensifying discussions on Won based stablecoins. Bank of Korea Governor Lee Chang-yong recently attended a dinner meeting with bank executives on June 23, where stablecoin-focused discussions were expected to take place.
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