South Korea's $1.34 trillion payments market is fracturing along a single fault line: who gets to issue a won-backed stablecoin. Eight commercial banks, three fintech conglomerates, at least two digital-asset custodians, and one breakaway consortium are running parallel proofs of concept while th...
"I expect that central bank digital currencies and deposit tokens will be able to coexist with stablecoins in a manner that is supplementary and competitive to each other." — Shin Hyun-song, Governor, Bank of Korea
South Korea's $1.34 trillion payments market is fracturing along a single fault line: who gets to issue a won-backed stablecoin. Eight commercial banks, three fintech conglomerates, at least two digital-asset custodians, and one breakaway consortium are running parallel proofs of concept while the legislation that would authorize any of them — the Digital Asset Basic Act — remains stalled in the National Assembly. The Bank of Korea suspended its Phase 2 CBDC pilot on June 26, ceding ground to private stablecoins before a single rule has been written.
The stakes are substantial. Korean won pairs account for 30% of global spot crypto volume, second only to the U.S. dollar. Hana Financial Group paid 1 trillion won ($670 million) in May for a 6.55% stake in Upbit operator Dunamu — the largest-ever investment by a Korean commercial bank in a digital-asset company. Toss, the 30-million-user super-app, has registered 24 stablecoin trademarks, signed PoC agreements with both Optimism and Solana, and deployed a dedicated task force under the banner "Money 3.0." KB Financial has already demonstrated an 87% fee reduction on cross-border remittances using a KRW stablecoin on the Kaia blockchain.
The regulatory deadlock has not stopped construction. It has, however, guaranteed that when legislation finally passes — now expected in H2 2026 at the earliest — the market will already be shaped by whoever built the most infrastructure while lawmakers deliberated.
South Korea's Digital Asset Basic Act (DABA) was supposed to pass in Q1 2026. It did not. The bill was pulled from the National Assembly's Political Affairs Committee Legislative Review Subcommittee agenda on May 12, pushed past the June 3 local elections, and now sits in legislative limbo for the second half of the year.
The central dispute: the Bank of Korea (BOK) insists that stablecoin issuers must be bank-led consortiums holding at least 51% ownership. The Financial Services Commission (FSC), Korea's primary financial regulator, opposes this threshold. The FSC cites the EU's MiCA framework, where 14 of 15 licensed stablecoin issuers are electronic money institutions rather than banks, and argues a rigid bank-first rule would suppress fintech participation.
A compromise proposal has surfaced: a hybrid model requiring banks to hold more than 50% of equity in an issuing entity, while fintech firms take a 34% stake with management rights. Neither side has formally accepted it.
The ruling Democratic Party introduced its own consolidated bill on April 8, and its Digital Asset Task Force has signaled willingness to pass consensus provisions first while deferring the stablecoin question to standalone legislation. That separation, however, would leave the most commercially significant question — who mints KRW stablecoins — unanswered for months longer.
The competition for Korea's won stablecoin market has consolidated into at least six identifiable groups, according to reporting by Seoulz and the Korea Herald.
The Original Bank Consortium. Eight commercial banks — KB Kookmin, Shinhan, Woori, NongHyup, Industrial Bank of Korea, Suhyup, Citibank Korea, and Standard Chartered First Bank — announced joint development of a won-pegged stablecoin in mid-2025. This coalition has since begun fragmenting.
The Hana-Dunamu Axis. Hana Financial Group acquired a 6.55% stake in Dunamu (operator of Upbit, which controls roughly 70% of Korean crypto exchange volume) for 1 trillion won ($670 million) in May 2026 — the largest cross-sector deal of its kind in Korean financial history. Hana, BNK Financial, iM Bank, and SC First Bank have formed their own separate KRW stablecoin consortium, splitting from the original eight-bank group. Post-acquisition, Hana and Dunamu confirmed plans to collaborate on won-pegged stablecoins, blockchain remittances, and tokenized securities.
Toss / Viva Republica. Toss declared in March 2026 that it intends to both issue and distribute stablecoins. The company serves 30 million users, links to more than 500,000 merchants, and holds integrated licenses spanning banking, securities, and payments. Its "Money 3.0" framework — presented by Corporate Development Director Seo Chang-whoon — centers on programmable money, borderless finance, and stablecoin-based payment rails replacing traditional bank transfers. On July 8, Toss signed a strategic agreement with Optimism and Sunnyside Labs for a three-month PoC testing OP Stack infrastructure for a KRW-linked stablecoin. Separately, Toss Bank signed an MoU with the Solana Foundation on June 19 to test stablecoin-based remittance and settlement infrastructure. Toss has registered 24 stablecoin-related trademarks, including "TOSSKRW." The company is evaluating whether to build a full L1 blockchain or deploy an L2 on an existing chain.
BDACS / KRW1. BDACS launched KRW1 in September 2025, the first fully collateralized won-backed stablecoin, initially on Avalanche with each token backed 1:1 by Korean won held in escrow at Woori Bank. KRW1 has since expanded to Polygon (December 2025), signed an MoU with Circle for deployment on Arc (October 2025), partnered with Plume for institutional RWA settlement (February 2026), and added Aptos as its first non-EVM chain (May 2026). KRW1 remains in pilot phase and has not entered public circulation.
KB Financial / Kaia. KB Financial Group completed a pilot in May 2026 on the Kaia blockchain (the merged Kakao Klaytn / LINE Finschia chain) in collaboration with KG Inicis and OpenAsset. The pilot tested QR-code payments at Hollys Coffee locations and cross-border remittance to Vietnam.
BNK Busan Bank / K-STAR. BNK Busan Bank completed a separate PoC on Kaia in early July 2026, focused on programmable digital local currencies. The consortium — including AhnLab Blockchain Company, OpenAsset, Kaia, and Lambda256 — tested policy-based spending restrictions, expiration rules, and merchant-category settlement logic. K-STAR reported sub-one-second settlement processing under stress-test conditions.
The legislative vacuum has not prevented activity. At least four separate KRW stablecoin proofs of concept have been completed or are underway as of July 2026:
| Pilot | Lead Entity | Blockchain | Status | Key Result | |-------|-------------|------------|--------|------------| | KRW1 | BDACS / Woori Bank | Avalanche, Polygon, Aptos | PoC complete, not public | First fully collateralized KRW stablecoin | | QR Payments + Remittance | KB Financial / KG Inicis | Kaia | Pilot complete (May 2026) | 87% fee reduction on Vietnam remittance vs. SWIFT | | Programmable Local Currency | BNK Busan Bank / K-STAR | Kaia | Pilot complete (July 2026) | Sub-1-second settlement under load | | OP Stack KRW Infrastructure | Toss / Optimism / Sunnyside | OP Stack (Ethereum L2) | 3-month PoC started July 8 | Testing KYC/AML on public chain | | Solana Remittance | Toss Bank / Solana Foundation | Solana | MoU signed June 19 | Testing stablecoin-based cross-border transfers |
The PoC scope is widening. Toss's Optimism test is specifically validating three technical questions: whether financial institutions can directly control payment and settlement processes on a public chain; whether KYC and AML requirements can be technically enforced on-chain; and whether individual transaction data can be protected on a public network. These are regulatory prerequisites, not product features — Toss is building the compliance case before the regulator writes the compliance rules.
On June 26, the Bank of Korea notified participating financial institutions that it would suspend Phase 2 of Project Hangang, its retail CBDC pilot. The official rationale: rising costs for banks and unclear commercialization prospects.
The timing is notable. BOK Governor Shin Hyun-song, in his inaugural address on April 21, prioritized CBDCs and bank-issued deposit tokens while omitting any mention of stablecoins — a conspicuous exclusion given the ongoing DABA debate. During his earlier confirmation hearing, Shin had acknowledged that CBDCs and stablecoins could "coexist in a manner that is supplementary and competitive."
The suspension does not formally end the CBDC program. BOK has indicated it may revisit Phase 2 in mid-2026, contingent on the outcome of stablecoin legislation. In practice, however, the pause hands momentum to private issuers. Every month without a CBDC timeline is another month in which banks and fintechs advance their own stablecoin infrastructure.
The parallel is instructive: the EU's digital euro remains in legislative limbo while MiCA-licensed stablecoin issuers proliferate. Korea appears to be following the same trajectory — private stablecoins filling the space that a sovereign digital currency was supposed to occupy.
Cross-border remittances have become the primary proving ground for KRW stablecoins. The economic case is straightforward.
Korea's three leading fintech platforms — Toss, Kakao Pay, and Naver Pay — moved KRW 640.31 billion ($480 million) in foreign remittances during 2024, a 443% increase from 2022, according to open-banking API data. NH Nonghyup Bank and Hana Financial piloted cross-border ledger settlements on Partior's blockchain in December 2025, reducing remittance cycles from days to minutes.
KB Financial's Kaia pilot quantified the cost differential: a cross-border remittance to Vietnam using a KRW stablecoin converted to a dollar stablecoin completed in under three minutes at a cost approximately 87% lower than the equivalent SWIFT transaction. If that ratio holds at scale, the implication for Korea's correspondent banking infrastructure is substantial.
Toss Bank's June 19 MoU with the Solana Foundation is explicitly focused on remittance rails. Toss Bank serves approximately 15 million customers. The initial PoC phase will verify the technical feasibility of stablecoin-powered cross-border transfers before testing with overseas partners and validating AML/KYC processes.
The Hana Institute of Finance projects Korea's security token offering (STO) market will reach 367 trillion won ($242.8 billion) by 2030. A functioning KRW stablecoin would serve as the settlement layer for that tokenized asset market — a dependency that makes the stablecoin question foundational rather than incidental to Korea's broader digital-asset strategy.
The Digital Asset Basic Act, whenever it passes, must answer five questions that will determine market structure:
1. Issuer eligibility. The 51% bank-ownership threshold remains the central dispute. If adopted, it effectively excludes standalone fintech issuers. If rejected or modified, it opens the market to licensed electronic money institutions along the MiCA model.
2. Reserve custody. Where must KRW stablecoin reserves be held? Current pilots use commercial bank escrow (Woori Bank for KRW1). The BOK has not indicated whether it would serve as a reserve custodian or require reserves in central bank accounts.
3. Supervisory jurisdiction. The BOK and FSC have competing claims over stablecoin oversight. The BOK sees stablecoins as monetary instruments within its mandate. The FSC treats them as financial products under its regulatory scope. This turf dispute is a primary driver of legislative delay.
4. Foreign issuer access. No framework exists for non-Korean stablecoin issuers (e.g., Circle, Tether) to operate legally in the Korean market. DABA's silence on this point creates uncertainty for global operators.
5. Interoperability requirements. With pilots running on Avalanche, Kaia, Solana, Ethereum L2s, and Aptos, the question of whether KRW stablecoins must be interoperable across chains — or whether issuers can lock users into proprietary networks — remains unaddressed.
Korea's stablecoin race is a regulatory arbitrage story, not a technology story. The blockchains work. The pilots settle. The 87% fee reduction is real. What remains undecided is who captures the economics of issuance in a $1.34 trillion payments market where the won already drives nearly a third of global crypto spot volume.
The six factions building infrastructure are making a calculated bet: that when legislation arrives, it will favor those who have already demonstrated technical viability, regulatory compliance capacity, and commercial traction. The Bank of Korea's CBDC retreat reinforces this logic. Every week of legislative delay is another week in which private actors entrench their positions.
The outcome will depend on a single legislative clause — the bank ownership threshold for stablecoin issuers. Set it at 51%, and Korea's stablecoin market becomes a bank cartel with fintech subcontractors. Lower it, and a 30-million-user super-app with $480 million in annual remittance flow and 24 registered stablecoin trademarks becomes a formidable independent issuer.
The infrastructure is being built. The only question is whose name goes on the license.