Banks in South Korea to Introduce Shared Digital Currency

Banks in South Korea to Introduce Shared Digital Currency

South Korea Prepares Comprehensive Stablecoin Regulations

South Korea is gearing up to introduce a detailed legal framework for stablecoins, with a focus on won-pegged stablecoins. This move is part of the second phase of the Virtual Asset User Protection Act, and a key legislative bill is expected to be submitted to the National Assembly in October 2025.

The regulatory framework aims to establish clear legal standards for stablecoin issuance, collateral management, and internal risk controls. Key points of the current regulatory plan include strict issuance rules and collateral oversight, robust risk management and transparency, and the development of a won-pegged stablecoin.

The government and major banks in South Korea are collaborating to launch a stablecoin pegged to the Korean won. This initiative aims to reduce dependence on dollar-backed tokens and reinforce national monetary sovereignty. Major banks such as KB Kookmin, Woori, Shinhan, Hana, Nonghyup, Suhyup, Citi Korea, and SC First Bank are actively involved in these stablecoin initiatives.

President Lee Jae Myung has made digital finance, including stablecoin regulation, a national priority to strengthen South Korea’s digital economy and monetary independence. Multiple lawmakers have introduced related bills, emphasizing innovation and stablecoin safety.

The regulatory environment is designed to support digital monetary sovereignty while aligning with global regulatory trends. The Bank of Korea has expressed concern about Visa or Mastercard launching a stablecoin, which prompted the tokenized deposit initiative. Seoul Business Daily reported that a banking official expressed concerns about funds flowing out of deposits to stablecoins if banks do not actively enter the market.

South Korea has started piloting tokenized deposits using a wholesale central bank digital currency (wCBDC) for interbank settlement. The initiative is being coordinated by the Open Blockchain and DID Alliance. Korean banks KB Kookmin, Shinhan, Woori, NH Nonghyup, IBK Industrial, Sh Suhyup, and Korea Financial Telecommunications & Clearing Institute (KFTC) have decided to create a joint venture to issue a Korean stablecoin.

Project Pax, a Japanese initiative for banks to use stablecoins for cross-border payments, includes participation from Shinhan Bank and NH Nonghyup Bank. Project Pax uses Japan's Progmat tokenization platform, whose backers include MUFG, SMBC, and Mizuho Bank.

Korea was the launch location for the failed Terra algorithmic stablecoin, which triggered a wave of crypto bankruptcies and contributed to the collapse of the FTX crypto exchange. This incident may have made Koreans more wary of stablecoins. The Open Blockchain and DID Alliance has created a stablecoin working group with the participating banks, aiming to create a trustworthy 'stablecoin' ecosystem.

Ledger Insights Research has published a report on bank-issued stablecoins and tokenized deposits featuring more than 70 projects. The association official stated they aim to support the revitalization of the domestic blockchain industry through collaboration with banks. The Trump administration has promoted the use of dollar stablecoins.

As of 2025, Hana Bank is the only large Korean bank not mentioned in the joint venture. The plans are aimed for a launch and formal regulation by late 2025 or early 2026.

1. The government and major banks in South Korea are collaborating to launch a stablecoin pegged to the Korean won, with banks such as KB Kookmin, Woori, Shinhan, Hana, Nonghyup, Suhyup, Citi Korea, and SC First Bank actively involved.
2. President Lee Jae Myung has made digital finance, including stablecoin regulation, a national priority to strengthen South Korea’s digital economy and monetary independence.
3. The regulatory framework aims to establish clear legal standards for stablecoin issuance, collateral management, and internal risk controls, with strict issuance rules and collateral oversight as key points.
4. South Korea has started piloting tokenized deposits using a wholesale central bank digital currency (wCBDC) for interbank settlement, with Korean banks KB Kookmin, Shinhan, Woori, NH Nonghyup, IBK Industrial, Sh Suhyup, and Korea Financial Telecommunications & Clearing Institute (KFTC) participating in the joint venture.
5. The Open Blockchain and DID Alliance has created a stablecoin working group with the participating banks, aiming to create a trustworthy 'stablecoin' ecosystem, possibly due to the previous failure of the Terra algorithmic stablecoin.
6. Ledger Insights Research has published a report on bank-issued stablecoins and tokenized deposits featuring more than 70 projects, with the association aiming to support the revitalization of the domestic blockchain industry through collaboration with banks.
7. The Bank of Korea has expressed concern about Visa or Mastercard launching a stablecoin, which prompted the tokenized deposit initiative, and the Trump administration has promoted the use of dollar stablecoins.

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