Major South Korean commercial banks to issue a won-based stablecoin

This unprecedented collaboration marks the first time domestic financial institutions are venturing into stablecoin issuance, positioning South Korea to enhance its digital asset ecosystem and respond to the growing global interest in stablecoins.

Major South Korean commercial banks are joining forces to issue a won-based stablecoin, marking an unprecedented move by domestic financial institutions into the digital asset realm.

The Open Blockchain & DID Association, a non-profit organization, is setting up a stablecoin division with the participation of leading banks—KB Kookmin Bank, NH Nonghyup Bank, Shinhan Bank, Woori Bank, IBK Industrial Bank, and Sh Suhyup—and the Korea Financial Telecommunications and Clearings Institute. The consortium will begin exploring coin issuance methods by referencing existing models in the U.S. and Japan.

The banks' foray into stablecoin issuance is seen as a response to the growing global interest in these assets, which are designed to maintain a stable value by pegging them to fiat currencies, typically the U.S. dollar. The institutions are considering linking the stablecoins to the won, aiming to combine the swift transactions and low fees offered by cryptocurrencies with the stability of traditional currencies.

This development comes as the Financial Services Commission is preparing a second-phase plan for institutionalizing virtual assets, including stablecoins, which is expected to be implemented in the latter half of the year.

The Open Blockchain & DID Association, founded in 2018 with approval from the Ministry of Science and ICT, has been at the forefront of fostering a robust blockchain industry ecosystem through policy recommendations and business execution.

This initiative also coincides with efforts in the National Assembly to regulate the digital asset industry. Min Byung-deok, a member of the Assembly's Political Affairs Committee from the Democratic Party of Korea, is preparing to propose the "Digital Asset Basic Act," which includes provisions for stablecoin issuance authorization.

Highlighting the significance of this move, a financial industry official stated, "We anticipate that the influence of stablecoins will likely extend to the banking industry before the virtual asset market, leading to a response from the private sector. Activating won-based stablecoins is crucial for participating in global regulatory discussions and fostering related industries such as payments and remittances."

If South Korea completes the legal framework for stablecoin issuance later this year, the consortium could form a joint venture and commence full-scale issuance by year's end. This development would solidify South Korea's role in the evolving landscape of digital finance.