South Korea’s first won-pegged stablecoin KRW1 goes live on Avalanche

South Korea’s first won-pegged stablecoin, dubbed KRW1, has gone live on the Avalanche blockchain.

BDACS, a Seoul-based digital asset firm that developed the stablecoin, said in a September 17 announcement that each KRW1 token is fully backed by Korean won reserves held in escrow at Woori Bank, one of the country’s leading financial institutions. 

Before this, BDACS had successfully completed a proof-of-concept pilot for KRW1 earlier this year.

KRW1 is pegged 1:1 with the Korean won, and BDACS has implemented a real-time API connection to Woori Bank to provide verifiable proof-of-reserves. 

This infrastructure allows users to independently verify the fiat backing behind every stablecoin in circulation.

Initially, KRW1 will only be available on Avalanche, which, according to the issuer, was chosen for its security and performance benefits, while noting that cross-chain expansions are already being planned. 

BDACS will also develop an ecosystem around KRW1, which will include various components like peer-to-peer transaction enabling tools, transaction verification systems, and means to extend support for the stablecoin across more financial applications.

As a part of its long-term ambitions, the company envisions KRW1 being used in a range of scenarios, including cross-border remittances, digital payments, investments, and even government-backed distribution programs such as emergency aid.

“We are building the backbone of the digital asset market,” said BDACS CEO Harry Ryoo, calling the token a “foundational asset for the digital economy.”

South Korea’s stablecoin push

Although KRW1 is the first won-pegged stablecoin to go live for public use, it isn’t the first to be developed. 

Its launch follows months of groundwork laid by earlier pilots, including the August debut of KRWIN, a test stablecoin issued by fanC and Initech, as part of South Korea’s efforts to build a domestic stablecoin market.

Unlike KRW1, KRWIN was confined to internal circulation and designed to test out technical feasibility and transferability in a limited setting.

Since then, interest in stablecoins has only grown, with many industry sources saying that other major players, including crypto exchange Bithumb and fintech giant Viva Republica, which operates the Toss app, are actively exploring stablecoin ventures. 

South Korea’s largest crypto exchange, Upbit, is also said to be working with Naverpay on a similar initiative, although details remain under wraps.

Behind this push is a supportive regulatory environment driven by the newly elected President Lee Jae-myung, who has publicly endorsed the development of cryptocurrency assets backed by the Korean won, and has urged local firms to innovate in the space rather than rely on dollar-pegged alternatives like USDT and USDC.

Simultaneously, regulators are preparing to introduce formal rules to govern the stablecoin and the broader cryptocurrency market. 

The Financial Services Commission is expected to unveil a new framework for stablecoins next month as part of the second phase of the Virtual Asset User Protection Act, first introduced in late 2023.

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