South Korea Launches KRW1 Stablecoin Fully Backed by Won and Issued on Avalanche Blockchain
- South Korea launches KRW1, the first stablecoin backed by the won on the Avalanche blockchain.
- KRW1 is fully backed by escrowed won at Woori Bank and offers real-time reserve verification through API.
- New rules for stablecoins are coming as South Korea drafts its first unified regulatory framework.
South Korean digital asset custodian BDACS has launched KRW1, a stablecoin pegged 1:1 to the Korean won. The token went live on September 17 on the Avalanche blockchain. Each KRW1 token is fully backed by won held in escrow at Woori Bank. BDACS confirmed that the reserves are verifiable in real time through API integration.
This launch follows a successful proof-of-concept completed in partnership with Woori Bank. BDACS selected Avalanche for its security and network performance. The company has also developed systems for issuing, managing, and verifying KRW1 transactions.
Use Cases and Expansion Plans
KRW1 will serve various financial use cases. These include remittances, payments, and digital investments. BDACS also plans to extend the token’s use into public-sector programs, including emergency relief.
The company has built an application framework to support user access. Features such as peer-to-peer transfers and transaction validation are available from launch. BDACS intends to expand KRW1 to other blockchain networks in future phases.
The token’s pilot phase aims to test its performance and functionality under regulated conditions. BDACS views KRW1 as part of the long-term infrastructure for South Korea’s digital asset ecosystem. Recently, BDACS launched regulated XRP custody for institutions in South Korea. This partnership with Ripple aligns with Korea’s push for institutional crypto adoption.
Growing Interest Among Financial Institutions
The launch comes amid rising interest in won-pegged stablecoins across South Korea. Several major banks, including Kookmin Bank and Kakao Bank, have filed for related trademarks. FanC and Initech recently tested KRWIN, the first domestic stablecoin pilot.
Surveys have shown strong demand from local users for stablecoins tied to the Korean won. Many residents rely heavily on USDT and USDC for trading. Concerns are rising that dollar-pegged assets could dominate the market if local alternatives remain limited.
A group of eight banks has discussed creating a joint won-based digital asset. They have warned of increasing dependency on foreign stablecoins. This makes domestic solutions like KRW1 more urgent for financial independence. Moreover, South Korea signed a deal with the Organisation for Economic Co-operation and Development (OECD) to adopt a worldwide crypto reporting system.
Regulatory Developments and Policy Direction
South Korea’s Financial Services Commission (FSC) is drafting a regulatory framework for stablecoins. The upcoming bill will address collateral, issuance requirements, and internal controls.
The legislation is expected to roll out in October as part of the Virtual Asset User Protection Act’s second phase. Lawmakers have received briefings on the planned structure. This will establish South Korea’s first unified rules for stablecoin operation.
Authorities aim to align local policies with global standards. Similar stablecoin initiatives are underway in Japan and Hong Kong. South Korea’s move follows recent progress on regulation in the United States.
The launch of KRW1 signals South Korea’s intent to secure its position in the global stablecoin landscape.
