South Korea to advance stablecoin push with new regulation: report

Efforts to launch a won-denominated stablecoin in South Korea are gaining traction as financial regulators prepare to publish a detailed proposal for the assets.

On August 18, local media outlet MoneyToday reported that the Financial Services Commission (FSC) of South Korea is currently drafting a stablecoin-focused regulatory framework, marking a key step in the country’s push for a won-denominated digital asset.

Citing political sources, the report stated that the bill is expected in October and will define requirements for stablecoin issuance, collateral management, and internal control systems. It will be included in the second phase of the Virtual Asset User Protection Act, which the FSC has been drafting since late 2023. 

Once unveiled, the proposal will provide the country’s first unified framework for stablecoin issuance, bringing clarity to how won-pegged tokens can be issued, launched, and managed. 

Democratic Party lawmaker Park Min-gyu reportedly confirmed recently that he had received an FSC briefing on the direction of stablecoin regulation, adding that the proposal is expected to be submitted to the National Assembly in the coming months.

The push builds on months of growing political and industry attention toward stablecoins. Since the election of pro-crypto President Lee Jae-myung, who pledged to expand digital asset use during his campaign, momentum around a won-denominated token has accelerated.

Surveys conducted earlier this year already revealed strong interest in stablecoins among South Korean citizens, with USD-backed tokens widely used for trading and remittances. To offset the dominance, eight major banking institutions in the region are also collaborating to build a joint stablecoin venture that serves the local market, urging regulatory greenlight to avoid using ground to foreign issuers.

“There is a shared sense of crisis that if things continue this way, foreign dollar coins could dominate the domestic market,” a bank official said earlier in the year. “It is time to secure both the independence and competitiveness of the domestic financial system through a won-based digital currency.”

As collaborative efforts mount, the country has now seen the rollout of the first won-pegged stablecoin.

Private sector leads South Korea stablecoin debut

On August 5, South Korea-based entertainment platform fanC, in partnership with financial software firm Initech, unveiled KRWIN, a stablecoin pegged 1:1 to the Korean won. 

As reported by the local media at the time, the pilot program is testing KRWIN’s technical feasibility, including transferability and real-world applications in payments, remittances, and tourism. Lee Dong-ho, a spokesperson for fanC, called the launch “a major milestone” in advancing stablecoin adoption in the nation, positioning KRWIN as a potential private model for won-denominated digital assets. 

While distribution is limited to internal groups affiliated with the firms for now, the firm has reportedly filed a trademark application for KRWIN with the Korean Intellectual Property Office, signaling intent for a broader rollout.

Meanwhile, other Asian countries, including Japan and Hong Kong, are also pushing for similar initiatives, as global interest in stablecoins grows following the rollout of supportive legislation in the United States.

For now, dollar-pegged assets like USDT (USDT) and USDC (USDC) continue to dominate the market, and it remains to be seen how Asian markets can catch up.