the staff of the Ridgewood blog
Seoul South Korea, South Korea is making a bold move into digital finance. Under the leadership of newly elected President Lee Jae-myung, the Korean government has announced plans to legalize and promote stablecoin backed by the Korean won (KRW), signaling a major shift in the nation’s monetary and blockchain strategy.
This initiative is designed to curb capital outflows, boost financial sovereignty, and position Korea as a global fintech leader. Proposed legislation would end the longstanding ban on won-based stablecoins and introduce a comprehensive licensing framework, enabling their use across industries like gaming, e-commerce, and international trade.
🇰🇷 What’s Changing?
Under President Lee’s administration:
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Won-backed stablecoin are now a national economic priority.
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New legislation will lift the current ban and establish a regulatory framework.
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A consortium of eight major banks plans to jointly issue a KRW-pegged stablecoin.
These banks include:
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KB Kookmin Bank
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Shinhan Bank
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Woori Bank
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Nonghyup Bank
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Industrial Bank of Korea (IBK)
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Suhyup Bank
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Citibank Korea
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SC First Bank
The project is supported by the Open Blockchain and Decentralized Identifier Association (OBDIA), an influential industry body that includes leading tech firms and financial institutions.
💡 Why It Matters
While the U.S. dollar remains the dominant currency for stablecoins globally, South Korea’s move is one of the first serious efforts to nationalize digital currencies through traditional banking infrastructure.
The Bank of Korea previously hinted that commercial banks would be the first allowed to issue digital won, aligning closely with this initiative.
✅ Potential Benefits:
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Enhancing cross-border trade with a stable, blockchain-compatible digital KRW.
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Supporting Korean e-commerce and digital services by simplifying payments.
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Reducing dependence on the U.S. dollar in regional crypto and financial markets.
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Promoting monetary independence in a globalized economy.
⚠️ Concerns and Criticism
Not everyone is convinced. Critics argue that:
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The Korean won lacks global liquidity compared to the U.S. dollar.
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Won-backed stablecoins may become “proxy CBDCs” with limited international reach.
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Regulatory uncertainty could deter foreign participation.
However, supporters point to real-world applications in cross-border e-commerce, digital content, and South Korea’s booming gaming sector, where local currency integration could streamline global payments.
🌐 A Global First for Banks?
South Korea’s approach stands in contrast to the U.S., where private firms like Tether and Circle pioneered dollar-backed stablecoins long before banks got involved. By contrast, Korea’s plan puts banks at the forefront, potentially setting a new global model for stablecoin integration.
🔮 What’s Next?
The legislation is currently under review, with further updates expected in the coming months. If passed, South Korea could become the first major economy to fully integrate fiat-backed stablecoins into its financial system—with the backing of both regulators and banking giants.
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