Top commercial banks in South Korea have announced their collaborative efforts to launch a Won-pegged stablecoin. This initiative is seen as a move to strengthen the domestic digital finance ecosystem. Revealed in a report by Economic Review, this collaboration marks a significant step in reducing the dominance of the dollar-based digital assets in the South Korean financial system.

This is an ambitious project, which is why eight of the major banking institutions are banding together. The banks part of the project are Citibank Korea, KB Kookmin, Shinhan, Nonghyup, Woori, Suhyup, SC First Bank, and Industrial Bank of Korea. The project is on the way under the guidance of the Open Blockchain, DID Association, and the Financial Settlement Institute.

Major Banks Band Together for a Won-Pegged Stablecoin

All eight of these banks aim to issue a Korean Won-backed stablecoin by late 2025 or early 2026, depending on regulatory clearance status. All of this effort is made in response to foreign-issued stablecoins, especially those tied to the U.S. dollar. If local players don’t act swiftly, these foreign stablecoins can and will overtake the South Korean financial markets.

One of the bank officials stated, “There is a shared sense of crisis that if things continue this way, foreign dollar coins could dominate the domestic market. It is time to secure both the independence and competitiveness of the domestic financial system through a won-based digital currency.”

The project coincides with the Financial Services Commission’s recent release of a new roadmap outlining regulations for stablecoins and crypto ETFs, signaling the government’s intent to align with global standards while supporting domestic innovation.

Important Reads: South Korea Sets Ambitious Path for Crypto ETFs and Stablecoin Regulation

Two issuance models are currently under review: a trust-based structure and a deposit-linked model, both aimed at ensuring 1:1 backing with the Korean won. KB Kookmin, the country’s largest bank, has already taken preliminary steps by filing trademarks for potential stablecoin symbols, according to the Korea Intellectual Property Rights Information Service.

In parallel, South Korean Democratic lawmakers are advocating for an accelerated rollout of a government-issued stablecoin, highlighting its potential to bolster the value of the national currency and drive international adoption of won-backed digital assets. With major financial institutions and policymakers aligned on the importance of a domestic stablecoin, South Korea appears poised to become a leader in national digital currency innovation, reinforcing its financial sovereignty in an increasingly competitive global market.

Sign-Up on Coinflare to trade Bitcoin and other cryptocurrencies the right way. Take advantage of our exclusive offer and stand a chance to win up to $6,500 in rewards. Don't miss out!