South Korea is moving faster on plans for a won-pegged stablecoin after about $115 billion flowed into dollar-backed tokens in 2025. With a Digital Asset law expected this quarter, regulators, banks, and fintech firms are shaping rival issuance models. The Bank of Korea has tied the push to rising stablecoin use and concerns over cross-border capital flows.
Bank of Korea wants strict control over “currency-like substitutes”
The central bank described won stablecoins as “currency-like substitutes” and said they require tight oversight. Its warning was direct: unchecked issuance could interfere with monetary policy and disturb foreign exchange stability. The bank also pointed to the risk that stablecoins could be used to bypass reporting rules linked to cross-border transactions, putting compliance at the center of the debate.
On issuance, the Bank of Korea prefers a bank-led rollout. It argued that broad non-bank issuance could clash with the country’s separation of banking and commerce. Under the approach it outlined, banks would handle initial issuance under existing regulatory standards, while access for other entities would come only after formal risk reviews.
Two KRWQ projects are already targeting different parts of the market
Private-sector activity is advancing before the rulebook is finalized. TokenSquare has launched KRWQ, a won-based payment infrastructure built on BSV blockchain technology, aimed at real-time payments, enterprise settlement, and AI-driven transactions. CEO Oh Eun-jung said the platform is built for large-scale payment processing rather than trading. The project includes KYC and AML controls, with custody support from Korea Digital Asset.
A separate KRWQ stablecoin is listed on EDX Markets and was developed by IQ and Frax Finance. That version is aimed at institutional trading and hedging tied to the offshore non-deliverable forward market, which the report said exceeds $100 billion.
Regulators are split while local demand stays strong
South Korean regulators are not aligned on how stablecoin control should be structured. According to DWF Labs’ Andrei Grachev, the Bank of Korea supports a bank-led model with majority ownership in bank hands. The Financial Services Commission, by contrast, is reviewing a more flexible structure that is aligned with Europe’s MiCA framework.
Demand remains strong. Tiger Research CEO Kim Gyu-jin said offshore KRWQ trading at times reached around 1 billion won a day. South Korea also has about 18 million crypto investors, a figure that points to deep domestic participation in digital asset markets and explains why the won stablecoin debate is moving quickly.