Lost in Translation – A Look at Who Is Really Building a Korean Stablecoin

Recent reports claiming that South Korea’s government is preparing a state-backed Korean won stablecoin have been dismissed as “groundless” by a spokesperson from the ruling Democratic Party of Korea (DPK).

The statement pushes back against a wave of media speculation that government bodies were collaborating on a national stablecoin, clarifying that the real momentum is coming from the private sector.

What Caused the Confusion?

The confusion stems from remarks made by Jin Sung-joon, DPK’s chief policymaker, during a press briefing. Jin reportedly commented on monitoring discussions at the Presidential Commission on National Policy Planning, which some journalists misconstrued as confirmation of an official stablecoin initiative.

The DPK clarified that no such policy has been announced and that any interpretations to the contrary were likely the result of transcription errors to Coinness.

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Who Is Actually Building the ‘Digital Won’?

Despite this denial, South Korea is undeniably moving forward in the stablecoin space, just not through direct government issuance.

A private consortium of eight major banks, including KB Kookmin, Shinhan, and Woori, is actively developing a won-pegged stablecoin.

Backed by the Korea Financial Telecommunications and Clearings Institute, the initiative is being spearheaded alongside the Open Blockchain and Decentralized Identity (DID) Association and the Financial Settlement Institute. This collaboration aims to challenge the dominance of dollar-backed stablecoins.

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The planned stablecoin rollout, anticipated between late 2025 and early 2026, will feature two models: a trust-based version and a deposit-linked version, both pegged 1:1 to the Korean won.

On the other hand, Legislative support for such innovations is already materializing with the DPK introducing the Digital Asset Basic Act on June 10, legalizing stablecoin issuance for firms with at least $368,000 in equity capital.

Not Everyone is Convinced

Still, not everyone is onboard with the pace or direction of these developments. Bank of Korea Governor Rhee Chang-yong has voiced concerns that a stablecoin could facilitate easier currency swaps into US dollars, potentially undermining monetary policy.

Deputy Governor Ryoo Sangdai has recommended a cautious, bank-led rollout, citing systemic risks.

<blockquote>“It would be desirable to initially allow stablecoin issuance primarily through banks, which are subject to higher levels of financial regulation,” Ryoo noted.<blockquote>Meanwhile, South Korea is also continuing its research into a central bank digital currency (CBDC), with a pilot program concluding in June and more pilots under consideration as an alternative strategy to balance innovation and financial stability.