Stablecoin development in South Korea has taken a significant step forward with the introduction of KRW1, a won-pegged token launched on the Avalanche blockchain.
BDACS, a digital asset firm based in Seoul, unveiled KRW1 on September 17, marking a pivotal moment for the South Korean stablecoin market. The token is fully backed by South Korean won, with each KRW1 token being collateralized 1:1 with won held in escrow at Woori Bank. Real-time proof-of-reserves integration adds an extra layer of transparency and security to the token.
The decision to launch KRW1 on the Avalanche blockchain was based on its reputation for security and performance. BDACS plans to explore opportunities to expand the token to other networks in the future. The company has not only focused on issuance but also on developing a comprehensive framework for user applications, including features like peer-to-peer transfers and transaction verification.
With the aim of becoming a core infrastructure for Korea’s digital asset market, KRW1 is expected to have various use cases ranging from remittances and payments to investments and potentially public-sector programs like emergency relief disbursements. BDACS CEO Harry Ryoo expressed confidence in KRW1’s potential to become a foundational asset for the digital economy.
The launch of KRW1 follows earlier initiatives in South Korea, such as the KRWIN pilot by fanC and Initech, which aimed to kickstart the domestic stablecoin market. The growing interest in stablecoins in South Korea is evident, with surveys showing strong demand among citizens who already use dollar-backed tokens like USDT and USDC for financial transactions.
In addition to private sector initiatives, major banks in South Korea have been exploring stablecoin projects to offer domestic alternatives to dollar-pegged assets. A consortium of eight financial institutions is working on a won-based digital asset to ensure a balanced market presence.
Meanwhile, regulators in South Korea are preparing a regulatory framework for stablecoins, expected to be unveiled in October as part of the Virtual Asset User Protection Act. The legislation will outline requirements for issuance, collateral management, and internal control systems, providing a clear path for tokens like KRW1 to operate within the country’s financial system.
South Korea’s efforts to regulate stablecoins align with similar initiatives in Japan and Hong Kong, reflecting a global trend towards establishing clear policies to support the sector. As the stablecoin market continues to evolve, South Korea’s proactive approach positions it to compete on a global scale and establish a foothold in the growing digital asset landscape.