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Banks in South Korea to Initiate Collaborative Cryptocurrency

Banks in South Korea announce collaboration to issue a unified Korean stablecoin, countering the Trump administration's push for dollar stablecoins.

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3 min read
Banks in South Korea plan to introduce a shared digital currency, known as a stablecoin.
Banks in South Korea plan to introduce a shared digital currency, known as a stablecoin.

Banks in South Korea to Initiate Collaborative Cryptocurrency

South Korea is making significant strides towards a regulated stablecoin market, with plans for the rollout of won-backed stablecoins by the end of 2025. This push is part of a broader crypto regulatory development led by the Financial Services Commission (FSC) and supported by President Lee Jae-myung’s administration.

The FSC has submitted a comprehensive roadmap, targeting the launch of regulated spot crypto ETFs and stablecoins by late 2025. This roadmap covers various aspects, including issuance, custody, pricing mechanisms, operational frameworks, and investor protection rules, to embed stablecoins within the regulated financial system.

In late 2023, the FSC released official guidelines focusing on tokenized assets, including stablecoins. These guidelines emphasize clear definitions, issuance protocols, and investor safeguards, forming part of Korea’s integrated approach to tokenized securities and stablecoins under financial law frameworks rather than separate crypto rules.

The Bank of Korea, the country's central bank, has expressed ongoing support for digital currency innovations. It is establishing a dedicated Virtual Asset Committee/Team to monitor the crypto market and advise on won-denominated stablecoin policy. The Bank of Korea favours stablecoins issued by regulated financial institutions, particularly banks, before expanding issuance rights more broadly.

Eight major Korean banks, including KakaoBank, KB Kookmin, Shinhan, Woori, NH Nonghyup, IBK Industrial, Sh Suhyup, and Korea Financial Telecommunications & Clearing Institute (KFTC), are planning to launch won-pegged stablecoins by late 2025 or early 2026. Notably, KakaoBank, a major digital bank, is taking a leading role with intentions to issue stablecoins and provide custody services, working within regulatory compliance including KYC and AML standards.

While South Korea initially focused on a central bank digital currency (CBDC), CBDC test momentum has slowed, shifting the emphasis to regulated fiat-backed stablecoins as practical digital payment and remittance instruments that retain domestic capital and promote blockchain integration in the financial system.

Key collaborations include Shinhan Bank and NH Nonghyup Bank’s participation in Project Pax, a Japanese initiative for banks to use stablecoins for cross-border payments. However, Hana Bank is not among the Korean banks involved in the joint venture to issue a Korean stablecoin.

An association official has stated that they aim to create a trustworthy 'stablecoin' ecosystem through collaboration with banks and support the revitalization of the domestic blockchain industry. A report by Ledger Insights Research on bank-issued stablecoins and tokenized deposits features over 70 projects.

Despite concerns about Visa or Mastercard launching a stablecoin, the focus remains on bank-led initiatives to ensure a stable and trustworthy digital currency ecosystem in South Korea.

  1. South Korea aims to embed stablecoins within the regulated financial system by the end of 2025, as part of a broader crypto regulatory development.
  2. The Financial Services Commission (FSC) has submitted a comprehensive roadmap, targeting the launch of regulated spot crypto ETFs and stablecoins by late 2025.
  3. The Bank of Korea, the country's central bank, favors stablecoins issued by regulated financial institutions, particularly banks, as practical digital payment and remittance instruments that promote blockchain integration in the financial system.
  4. Eight major Korean banks, including KakaoBank, KB Kookmin, Shinhan, Woori, NH Nonghyup, IBK Industrial, Sh Suhyup, and Korea Financial Telecommunications & Clearing Institute (KFTC), are planning to launch won-pegged stablecoins by late 2025 or early 2026.
  5. Shinhan Bank and NH Nonghyup Bank's participation in Project Pax, a Japanese initiative for banks to use stablecoins for cross-border payments, is one of the key collaborations in South Korea's stablecoin industry.
  6. While concerns about Visa or Mastercard launching a stablecoin exist, the focus remains on bank-led initiatives to ensure a stable and trustworthy digital currency ecosystem in South Korea.
  7. A report by Ledger Insights Research on bank-issued stablecoins and tokenized deposits features over 70 projects, with the aim of creating a trustworthy 'stablecoin' ecosystem through collaboration with banks and support for the revitalization of the domestic blockchain industry.

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