STABLECOINS | South Korea Accelerating Efforts for Local Currency Alternatives to Counter Dollar-Pegged Stablecoin Dominance

South Korea is accelerating efforts to launch won-denominated stablecoins as policymakers, banks and fintech firms race to counter the growing dominance of U.S. dollar-backed tokens in the country’s crypto market, according to industry reports.

The push follows an estimated $115 billion in capital that flowed from domestic exchanges into dollar-based stablecoins such as USDT and USDC in 2025 raising concerns about monetary sovereignty and capital outflows.

An alliance of major South Korean banks is now working on a joint Korean won (KRW) stablecoin while technology firms and payment platforms are pursuing parallel initiatives creating a fragmented but rapidly evolving competitive landscape.

Several projects have already emerged. TokenSquare has launched a won-based stablecoin infrastructure known as KRWQ aimed at real-time payments and enterprise settlement, while a separate KRWQ token developed by other firms is targeting institutional trading and derivatives markets.

The divergence highlights a broader split in strategy between payment-focused stablecoins designed for domestic commerce and trading-focused tokens aimed at global liquidity and hedging demand.

Regulatory uncertainty remains a key constraint.

South Korea’s proposed Digital Asset Basic Act, which would define rules for stablecoin issuance, has yet to be finalized leaving open questions about whether banks, fintech firms, or a combination of both will be allowed to issue won-backed tokens.

Authorities have signaled a preference for a cautious rollout. The central bank has previously indicated that stablecoins should initially be issued by tightly regulated commercial banks to mitigate risks to financial stability and monetary policy.

At the same time, industry players are exploring broader use cases, including

• cross-border payments,
• remittances and
• merchant settlements,

as South Korea seeks to position a KRW stablecoin as a regional alternative to dollar-based digital currencies.

Analysts say the outcome of the race will depend on regulatory clarity and coordination between banks and technology firms with competing models now emerging for how a digital version of the Korean won could function both domestically and in global markets.

Stay tuned to BitKE on crypto regulations globally.

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