South Korea unveils stablecoin, KRW1, supported by the local currency Won and runs on the Avalanche blockchain.
South Korean digital asset custodian BDACS has made a significant stride in the cryptocurrency industry by launching KRW1, a stablecoin pegged 1:1 to the Korean won on the Avalanche blockchain. This move signals South Korea's intent to secure its position in the global stablecoin landscape.
BDACS partnered with Woori Bank for the launch, with the stablecoin fully collateralized by Korean won reserves held in escrow at the bank. KRW1 offers real-time reserve verification through API, ensuring transparency and trust.
The launch of KRW1 comes as the Financial Services Commission (FSC) of South Korea is drafting a regulatory framework for stablecoins. The legislation, expected to be rolled out in October as part of the Virtual Asset User Protection Act's second phase, aims to address collateral, issuance requirements, and internal controls. The authorities strive to align local policies with global standards.
BDACS views KRW1 as part of the long-term infrastructure for South Korea's digital asset ecosystem. The company plans to extend the token's use into public-sector programs, including emergency relief, and intends to expand KRW1 to other blockchain networks in future phases.
Several major banks in South Korea, including Kookmin Bank and Kakao Bank, have filed for related trademarks for won-pegged stablecoins. The group of eight banks in South Korea has discussed creating a joint won-based digital asset. These initiatives underscore the growing interest in stablecoins in South Korea.
BDACS selected Avalanche for its security and network performance. Similar stablecoin initiatives are underway in Japan and Hong Kong, indicating a broader trend towards the adoption of stablecoins in Asia. South Korea's move follows recent progress on regulation in the United States.
Concerns are rising that dollar-pegged assets could dominate the market if local alternatives remain limited. The launch of KRW1 and the forthcoming regulatory framework are steps towards addressing this issue, fostering a healthy and diverse stablecoin market.
Moreover, South Korea recently signed a deal with the Organisation for Economic Co-operation and Development (OECD) to adopt a worldwide crypto reporting system, further cementing its commitment to a regulated digital asset ecosystem.
As the stablecoin market continues to evolve, KRW1 represents a significant milestone for South Korea's digital asset industry. Its potential applications in various financial use cases, including remittances, payments, and digital investments, promise to reshape the financial landscape in South Korea and beyond.
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