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As the South Korean crypto industry awaits the highly anticipated regulatory framework, digital assets custodian BDACS and financial giant Woori Bank have partnered to launch the first stablecoin pegged to the Korean Won (KRW) on the Avalanche blockchain.
First Won-Pegged Stablecoin Launched On Avalanche
Digital asset custody firm BDACS officially launched the first South Korean won-backed stablecoin, KRW1, on the Avalanche blockchain in collaboration with Woori Bank, one of the four largest domestic financial institutions in the country
According to the X announcement, the stablecoin is currently in a pilot phase, following a successful proof-of-concept (PoC), and each KRW1 token is 1:1 collateralized with won held in escrow at Woori Bank.
BDACS reportedly plans to utilize the won-pegged stablecoin as a “low-cost payment and settlement system for public-sector programs, such as emergency relief disbursements, by significantly lowering payment processing fees.”
Additionally, KRW1 is “built for more than markets,” Avalanche’s X thread read, as it could become a “technical standard for stablecoins in Korea,” with the upcoming regulatory framework.
“BDACS has developed a comprehensive framework, including issuance and management systems as well as a user-facing app supporting peer-to-peer transfers and transaction verification,” the press release detailed.
Harry Ryoo, BDACS’s CEO, affirmed that the digital assets firm is “building the backbone of the digital asset market, serving corporate, institutional, and public-sector partners alike. KRW1 marks a turning point for our company, and we believe it will become a foundational asset for the digital economy.”
Banks, Crypto Industry Anticipate October Framework
KRW1 launches ahead of the regulatory framework by South Korea’s Financial Services Commission (FSC). As reported by Bitcoinist, the financial authority is expected to release the long-awaited guidelines for the issuance and distribution of won-backed stablecoin at the start of next quarter.
On August 18, Park Min-kyu, a member of the Democratic Party of Korea (DPK), affirmed that the government’s bill was expected to be submitted to the National Assembly in October. The lawmaker revealed that he had recently received a report from the FSC on the direction of stablecoins.
The FSC has been working to develop digital assets legislation and shift its regulatory approach, establishing the Virtual Asset Committee in November 2024 to prepare the next phases of its regulatory roadmap and finalize the second one by the end of 2025.
Multiple bills related to the issuance and distribution of won-pegged stablecoins have been introduced in South Korea’s National Assembly, including two rival bills in July by Korea’s ruling and opposition parties.
Ahn Do-gil, a member of the Planning and Finance Committee from the Democratic Party, introduced the “Act on the Issuance and Distribution of Value-Stable Digital Assets.” On the same day, Kim Eun-hye, a member of the Land, Infrastructure, and Transport Committee from the People Power Party (PPP), proposed the “Act on Payment Innovation Using Value-Fixed Digital Assets.”
In June, Min Byung-deok, a member of the National Assembly’s Government Committee, also introduced the “Digital Assets Basic Act,” which proposes allowing the issuance of won-pegged stablecoins and establishing a Digital Asset Committee under the direct authority of the president.
The banking sector has been studying two legalization scenarios, as it’s been unclear whether non-bank entities will be allowed to be stablecoin issuers. Notably, South Korea’s biggest banks have reportedly been in talks with Tether and Circle to discuss potential partnerships.
According to local reports, the CEOs of Shinhan Financial Group and Hana Financial Group CEO had separate meetings last month with Heath Tarbert, the president of Circle and a Tether official. Similarly, KB Financial Group and Woori Bank were also expected to meet with Tarbert.
Avalanche (AVAX) trades at $33.22 in the one-week chart. Source: AVAXUSDT on TradingView
Featured Image from Unsplash.com, Chart from TradingView.com
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