The Surge of South Korea's Stablecoin Market: Longer Forces Compete for Future Development

South Korean President Lee Jae-myung has clearly proposed innovative measures to support "local currency-pegged stablecoins" in his campaign program, aiming to curb capital outflow and enhance the competitiveness of the country's digital financial ecosystem. After the Lee Jae-myung government took office, the South Korean cryptocurrency industry quickly took action: not only are several major commercial banks preparing to launch a joint project for the Korean won stablecoin, but traditional tech giants and Web3 companies are also making moves, striving to gain an edge in the increasingly fierce regional and even global stablecoin competition.

At the same time, the Congress is reviewing relevant bills to provide a legal basis for private institutions to issue Korean won stablecoins, and financial regulatory authorities are also accelerating the establishment of operating norms in line with international standards. It is foreseeable that the second half of 2025 to the first half of 2026 is likely to become a key period for the rapid growth of the Korean stablecoin market.

Banking Alliance: The Pillar of Steady Development

The Bank of Korea takes a cautious attitude towards stablecoins, believing that they may affect monetary policy and the transaction settlement system. Against this backdrop, commercial banks have become the most competitive participants in the Korean won stablecoin space.

According to reports, eight major banks in South Korea plan to prepare for the establishment of a joint venture to issue a Korean won stablecoin, with participating banks including Kookmin Bank, Shinhan Bank, and Woori Bank. The project team is considering two stablecoin issuance schemes: a trust model and a deposit token model. These banks are discussing the joint construction of infrastructure, and the joint venture may be established as early as the end of the year or early next year.

Among them, the National Bank is the most active and has initiated the process of obtaining trademark rights related to stablecoins. Shinhan Bank had already collaborated with Hedera in 2021 for a pilot project of a Korean won stablecoin, and this year it also participated in a demonstration experiment for overseas remittances between Korea and Japan based on stablecoins. Other participating banks such as Woori Bank and NH Nonghyup Bank also have rich experience in international payments, playing important roles in CBDC testing, interbank RTGS, and blockchain projects.

Kakao Pay and Kaia: The Strong Layout of Tech Giants

As a leading company in the payment sector of South Korea, Kakao Pay is undoubtedly the most proactive among large firms in the layout of the KRW stablecoin. On June 22, Kakao Pay officially launched its business layout for the KRW stablecoin, submitting 18 trademark applications for the "KRW" "K" "P" combination to the Korean Intellectual Property Office, covering the areas of virtual asset financial transactions, electronic transfers, and intermediary services.

Kakao Pay will actively cooperate with the relevant legislative process to seek to become one of the first compliant stablecoin issuers once the regulations are implemented. It will also leverage its traditional business advantages to closely collaborate with its parent company's ecosystem, achieving deep integration of social, payment, and financial services, providing large-scale application scenarios for stablecoins.

Kaia is an EVM-compatible Layer 1 public blockchain formed by the merger of Klaytn and Finschia, aimed at connecting a total of 250 million users from Kakao Talk and LINE. Kaia's chairman, Sam Seo, stated that they will "fully promote the issuance of the Korean won stablecoin" on the Kaia mainnet. Kaia has launched local USDT and partnered with Tether to introduce USD₮, laying the foundation for the subsequent KRW stablecoin.

Danal: The Second Start of an Established Payment Service Provider

Korean veteran payment service provider Danal launched PayCoin in 2019, conducting early explorations in the field of virtual asset payments. With the improvement of the policy environment, Danal has restarted its digital currency business and has submitted multiple patent applications to the Korean Patent Office for POS terminals supporting virtual asset payments and their operational methods.

On a technical level, Danal has a natural advantage in the stablecoin business process due to its years of accumulated POS terminal network and payment settlement system. Its POS terminals can directly recognize and settle on-chain tokens, simplifying the user payment path; the backend system can seamlessly connect to off-chain reserve management, providing a basis for compliance audits and reserve proof.

Nexus: The First-Mover Advantage of Blockchain Startups

The blockchain startup Nexus has issued a Korean won stablecoin called KRWx on the BNB Chain and has submitted a trademark registration application to the Korean Patent Office. In addition, they have also submitted trademark applications for fiat stablecoins such as the US dollar, Japanese yen, and Euro.

Nexus CEO stated that they chose to pre-launch KRWx on the BNB Chain to establish a first-mover advantage and plan to continue launching more fiat-backed stablecoins. Nexus is preparing for the issuance of KRWx and other fiat stablecoins and plans to establish a subsidiary in Hong Kong to promote the internationalization of stablecoins.

Other Potential Participants

Samsung SDS's Nexledger is one of the most mature enterprise-grade private chain solutions in the South Korean market, supporting longer signatures, cross-chain interoperability, and high-performance throughput. Industry insiders believe that Nexledger has the core features required for stablecoins, and once the issuance plan is finalized, the technical preparations are almost ready.

As the official contractor for the wholesale CBDC/tokenized deposit system of the Bank of Korea, LG CNS has mastered the core capabilities of on-chain asset management, including minting, clearing, auditing, and custody. With the advancement of relevant laws, LG CNS can seize the role of infrastructure provider through technological output.

As the South Korean stablecoin market gradually opens up, various forces are actively positioning themselves, and the future competitive landscape will become more diverse and intense. Whether it's traditional financial institutions, tech giants, or blockchain startups, all are preparing for the upcoming stablecoin era.