South Korea launches its first won-backed stablecoin

Key points:

• KRW1 is fully backed by South Korean won stored in escrow accounts at Woori Bank.
• The stablecoin was issued on Avalanche and passed a PoC test confirming its technical and financial viability.
• There is currently no regulation of stablecoins in South Korea, so KRW1 is not publicly traded.

South Korean crypto custodian BDACS has announced the launch of the KRW1 stablecoin, backed by the national currency, on the Avalanche network. This is the first Korean stablecoin fully backed by won deposits.

The company confirmed the completion of a PoC test, which proved the technical and financial viability of the project. According to BDACS, KRW1 combines bank deposits, token issuance, and transaction verification into a single ecosystem.

Each KRW1 is backed by a South Korean won deposited in Woori Bank. API integration allows reserves to be verified in real time, increasing transparency.

Why was Avalanche chosen

The press release notes that the launch on Avalanche is due to the high performance and reliability of this network. Avalanche is recommended by the Korea Internet & Security Agency (KISA) for use in the financial sector.

“The Avalanche technology and its growing ecosystem of real-world assets will support BDACS and Woori Bank to deliver a trusted, innovative solution for Korea’s digital economy,” noted Justin Kim, Head of Asia at Ava Labs.

BDACS has developed a platform for issuing and managing stablecoins, as well as a mobile application. Users will be able to transfer funds directly (P2P) and verify transactions in the app.

Capabilities and plans

The company positions KRW1 as a universal tool for money transfers, payments, deposits, and investments. In the future, it plans to implement it in government applications, including emergency aid payment systems, where fees can be reduced.

BDACS is also considering the possibility of issuing KRW1 on other blockchains and integrating it with global stablecoins, including USDT and USDC.

Key parameters of KRW1

Legal status and regulation

Despite its launch, KRW1 remains in the PoC stage and is not publicly traded. The reason for this is the lack of a regulatory framework for stablecoins in South Korea.

South Korea postpones stablecoin law due to disputes

South Korea’s National Assembly has frozen the adoption of a stablecoin law. The disagreements concern the role of fintech companies and the Bank of Korea

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The adoption of the law has been temporarily postponed due to disagreements between regulators and legislators over key provisions. The Bank of Korea fears that allowing fintech and IT companies to issue stablecoins will lead to the growth of “private currencies” controlled by large technology corporations.

Four bills are being considered in the National Assembly. The requirements for issuers vary: from a minimum capital of 500 million won ($360 000), which opens the market to startups, to 5 billion won ($3,6 million), which leaves it only to large players.