South Korea Launches First Regulated Won Stablecoin KRW1

BDACS, in collaboration with Woori Bank, has introduced KRW1 as South Korea’s inaugural regulated won-pegged stablecoin, representing a watershed moment for the nation’s digital asset infrastructure. Each KRW1 token maintains full collateralization through South Korean won held in escrow at Woori Bank, with real-time banking API integration providing transparent proof of reserves. This structure ensures that every token in circulation is backed 1:1 by actual fiat currency, addressing one of the primary concerns regulators have about stablecoin reliability and consumer protection.

The development follows the successful completion of a proof of concept that validated the technical infrastructure spanning fiat deposits, token issuance, and blockchain verification. BDACS had strategically trademarked the KRW1 brand in December 2023, building the necessary infrastructure ahead of formal regulatory frameworks. The company selected the Avalanche blockchain for its deployment, citing the platform’s “high-performance capabilities” and recognition by Korea’s Internet & Security Agency for “reliability in public-sector applications.” Justin Kim, Head of Asia at Ava Labs, emphasized that “the successful test pilot of KRW1 demonstrates the need for a highly-performant and reliable blockchain tailored for a regulatory-compliant stablecoin.”

BDACS envisions KRW1 serving multiple financial functions including remittances, payments, investments, and deposits, with particular focus on public-sector deployment for low-cost payment and settlement systems in emergency relief disbursements. This targeted approach positions KRW1 not just as a cryptocurrency tool but as a practical financial instrument for both consumer and governmental use cases.

The company has ambitious expansion plans that include extending KRW1 to additional blockchains beyond Avalanche and exploring collaborations with global stablecoin networks. According to the press release, BDACS is considering potential partnerships with major USD-backed issuers including Circle and Tether, indicating a strategy to create interoperability between different stablecoin ecosystems. This global perspective suggests BDACS aims to position KRW1 as not just a domestic solution but as part of the broader international digital asset landscape.

South Korea’s stablecoin launch occurs against a backdrop of intensifying regional competition, with neighboring countries advancing their own digital currency initiatives. Japanese stablecoin JPYC expects to receive regulatory approval from the Financial Services Agency for its yen-backed stablecoin later this year, which would make it the first officially recognized yen stablecoin. Meanwhile, Ripple and SBI Holdings are preparing to launch RLUSD in Japan by early 2026 under the country’s Payment Services Act amendments.

Domestically, South Korean internet giant Kakao is also developing a won-pegged token through its Kaia blockchain, having registered trademarks including “KRWGlobal” and “KRWKaia” in August. The competition extends beyond Japan, with Bank of China’s Hong Kong unit seeing shares jump 6.7% earlier this month on reports that it plans to apply for a stablecoin issuer license. This regional activity underscores the strategic importance Asian financial markets are placing on stablecoin development as they seek to modernize their financial infrastructure.

The KRW1 launch comes at a critical juncture in South Korea’s regulatory evolution, with ruling and opposition parties having recently filed competing stablecoin bills. Both proposals demand full reserve backing and stronger oversight by the Bank of Korea, reflecting consensus on the need for robust consumer protections. However, significant differences emerge in the details: the Democratic Party’s proposal explicitly bans interest payments and requires $3.6 million minimum capital, while the People Power Party’s legislation omits interest restrictions, focusing instead on licensing and disclosure requirements.

Rich O., APAC regional manager at OneKey, previously told Decrypt that Korea’s stablecoin rules need a “balanced approach,” with monetary sovereignty and consumer protections weighed against the risk that “excessive restrictions” could weaken competitiveness. This regulatory uncertainty creates both challenges and opportunities for early movers like BDACS, who have positioned themselves ahead of formal legislation while advocating for frameworks that enable innovation without compromising financial stability.