Eight prominent commercial banks in South Korea have come together to form a consortium aimed at developing a stablecoin linked to the won. This initiative includes collaboration with the Open Blockchain and DID Association, as well as the Financial Supervisory Service.
The formation of this joint venture was made public on Wednesday by representatives from the financial sector, marking a historic move as it is the first instance where commercial banks have collectively engaged in the digital asset space.
The consortium comprises notable banks such as KB Kookmin, Shinhan, Woori, Nonghyup, Industrial Bank of Korea, Suhyup, Citibank Korea, and SC First Bank.
This announcement coincides with the Bank of Korea’s (BOK) push for a gradual introduction of a won-backed stablecoin.
During a press conference on Tuesday, BOK’s senior deputy governor, Ryoo Sang-dai, expressed a preference for allowing commercial banks to progressively implement won-denominated stablecoins.
The active involvement of commercial banks in the stablecoin market reflects a growing private sector interest in cryptocurrency. This development comes at a time when the United States has introduced a federal framework for dollar-pegged stablecoins, known as the GENIUS Act, with other nations like South Korea and major corporations like Amazon also beginning to embrace this emerging asset class.
Plans for Initial Won-Linked Stablecoin Models
According to local reports, the banks are currently engaged in discussions regarding a shared infrastructure. Detailed plans regarding this cooperative effort are expected to emerge later this year or early next year.
The initial proposal includes two distinct approaches for issuing the won-linked stablecoin: a trust-based model and a deposit-linked model.
In the trust-based model, coins are distributed following the separate management of customer funds, while in the deposit-linked model, coins will be issued at a 1:1 ratio with bank deposits.
A banking official stated, “There is a shared sense of crisis that if things continue this way, foreign dollar coins could dominate the domestic market. It is time to secure both the independence and competitiveness of the domestic financial system through a won-based digital currency.”
Regulatory Landscape and Presidential Commitments
This trend aligns with the recently proposed Digital Asset Act in South Korea’s National Assembly, which includes provisions for establishing a stablecoin authorization system.
Despite this momentum, the Bank of Korea remains cautious about launching a won stablecoin. In contrast, the newly elected President Lee Jae-myung has committed to implementing a KRW-pegged coin for business and international trade purposes.
In a tweet prior to his election, Lee highlighted the potential of a won-backed stablecoin to curb an estimated $40.8 billion in crypto capital flight, emphasizing the urgent need for such measures. His administration is swiftly advancing efforts to fulfill campaign promises aimed at modernizing South Korea’s regulatory framework for digital assets.
The consortium formed by these banks represents a privately driven initiative, setting it apart from the Central Bank Digital Currency (CBDC) being developed by the Bank of Korea. While further discussions regarding potential technological linkages with the central bank are ongoing, there are indications that this venture could evolve into diverse applications, including cross-border remittances and domestic payment solutions.
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