An estimated $115 billion flowed from South Korean crypto exchanges into dollar-denominated stablecoins during 2025, triggering what policymakers now frame as a monetary sovereignty crisis. Six corporate groups — spanning banks, fintech platforms, and crypto exchanges — are racing to issue won-ba...
"It is now time to move beyond unproductive debates over the necessity of stablecoins and focus discussions on designing and institutionalizing them safely." — Democratic Party Digital Asset Task Force, National Assembly of South Korea
An estimated $115 billion flowed from South Korean crypto exchanges into dollar-denominated stablecoins during 2025, triggering what policymakers now frame as a monetary sovereignty crisis. Six corporate groups — spanning banks, fintech platforms, and crypto exchanges — are racing to issue won-backed stablecoins before the Digital Asset Basic Act clears the National Assembly, a vote that has been delayed by a dispute between the Bank of Korea and the Financial Services Commission over who gets to issue them.
The stakes extend beyond payments. South Korea's 18 million crypto holders represent roughly 35% of the adult population. The country's five largest crypto exchanges processed 17.1 trillion won ($12.4 billion) in daily volume at peak in December 2024. The central question — whether banks or fintechs control stablecoin issuance — will shape how a $1.7 trillion economy manages digital capital flows for the next decade.
The numbers are stark. According to Bank of Korea data submitted to Rep. Cha Kyu-geun of the Rebuilding Korea Party and reported by Seoul Economic Daily on May 5, 2026, Korean crypto holdings fell from 121.8 trillion won in December 2024 to 60.6 trillion won by February 2025 — a 50% decline in two months. Daily trading volume collapsed 74% from 17.1 trillion won to 4.5 trillion won over the same period.
Where did the money go? Primarily into USDT and USDC. An estimated $115 billion in capital migrated from domestic exchanges to dollar-pegged stablecoins in 2025, according to data compiled by Seoulz. In Q1 2025 alone, roughly $40 billion leaked out. The dynamic is structurally familiar: Korean traders use dollar stablecoins to access global liquidity pools, offshore DeFi yields, and to hedge won depreciation — all outside the reach of domestic monetary policy.
For the Bank of Korea, this represents a direct challenge to monetary transmission. When a third of a nation's adult population can move capital into dollar-denominated instruments with a smartphone tap, the central bank's ability to manage interest rate pass-through and foreign exchange stability weakens materially.
The won-stablecoin race has organized around six distinct corporate strategies, each with different distribution networks and blockchain infrastructure:
1. Bank Consortium (Hana, BNK, iM Bank, SC First Bank) Hana Financial Group leads a multi-bank consortium that signed MOUs with Circle and Dunamu to explore cross-border remittance infrastructure. Hana is also working to replace SWIFT-based remittances via Dunamu's GIWA Chain, an Ethereum Layer-2. Target: institutional settlement and cross-border payments.
2. Woori Bank + BDACS Woori Bank completed a proof of concept for KRW1, a won-denominated stablecoin built on Avalanche, in partnership with Busan Digital Asset Custody Service (BDACS). KRW1 launched in September 2025. Woori has also signed an agreement with MoonPay and is integrating with Samsung Wallet. BDACS separately partnered with Plume in February 2026 for RWA settlement.
3. Kakao (KakaoPay + Kaia) KakaoPay CEO Shin Won-geun announced a won stablecoin consortium in December 2025. Kakao has filed trademark applications for PKRW, KKRW, and KRWP. The company controls 42 million registered KakaoPay users and the Kaia blockchain (formed from the merger of Klaytn and LINE's Finschia). However, Kaia's on-chain metrics are poor: TVL has collapsed to approximately $12.5 million from $104.37 million in August 2025, and the KAIA token trades at 69 won — down 98% from its April 2021 peak of 5,049 won.
4. Naver-Dunamu (Post-Merger) Naver Financial is acquiring Dunamu, operator of Upbit (South Korea's dominant exchange with 8 million active traders), in a $10.3 billion all-stock deal. Shareholder vote is scheduled for May 22, 2026, with closure expected by June 30. The combined entity would link Naver Pay's 34 million users to Upbit's crypto infrastructure. According to Peter Chung of Presto Research, the merger "is driven by both companies' stablecoin ambitions."
5. Toss (Viva Republica) Toss commands 30 million platform users and plans to deploy stablecoin acceptance across 500,000 POS terminals by late 2026, scaling to 700,000 by 2027. The company's existing payments network provides a ready distribution layer.
6. Coupang Pay South Korea's largest e-commerce company ($33 billion annual revenue) is exploring stablecoin adoption that could generate an estimated $200 million in annual savings by reducing payment processing friction.
The Digital Asset Basic Act — South Korea's first comprehensive crypto law since a near-decade-long prohibition on domestic token issuance — was expected to pass the National Assembly in Q1 2026. It has not.
The core dispute: the Bank of Korea insists that stablecoin issuers must be at least 51% owned by commercial banks. The Financial Services Commission argues this threshold would entrench bank monopolies and suppress competition from fintechs. The Korea Internet Corporations Association has publicly criticized the 51% requirement as protectionist.
On April 8, 2026, the ruling Democratic Party introduced its own version of the bill, proposing a framework covering issuance, trading, custody, advisory services, and supervision. The bill would require stablecoin issuers to maintain authorization, refund reserves, redemption obligations, capital thresholds, and operational capacity standards. It would also establish a digital asset committee for policy coordination.
Rep. Lee Jung-moon, chair of the Democratic Party's Digital Asset Task Force, stated on April 16: "We cannot miss the window for discussion while waiting for the government's bill." The party is now pursuing a phased approach — passing immediately addressable provisions first while deferring the 51% ownership question.
A separate catalyst arrived when Shin Hyun-song, the nominee for Bank of Korea governor, reversed his previous opposition to stablecoins, stating they can "coexist in a complementary yet competitive manner within the future monetary ecosystem." This shift has raised expectations that regulatory discussions will accelerate, though no firm passage date has been set. Local elections on June 3, 2026, complicate the legislative calendar.
The ownership debate is not academic. It determines the fundamental architecture of South Korea's digital payments future.
Under the Bank of Korea's 51% rule, every won stablecoin would effectively be a bank product. Fintechs like Toss, KakaoPay, and Naver Pay — which collectively reach over 100 million registered accounts (with significant overlap across South Korea's 52 million population) — would need bank partners holding majority stakes in their stablecoin operations.
The banks' argument is monetary stability. Won-backed stablecoins that are not anchored to regulated bank balance sheets could, in theory, create a parallel monetary system with weaker reserve guarantees. The Bank of Korea's position aligns with its mandate to maintain FX stability and monetary policy transmission.
The fintechs' counterargument is distribution. Shinhan Card has already signed an MOU with the Solana Foundation for stablecoin payment technology. Shinhan Financial is testing stablecoin settlement via the Ddangyo food delivery platform. Sooho.io demonstrated its Project Namsan pilot with 2,000 foreign tourists, reducing retail foreign exchange fees from approximately 1% to 0.3% with immediate merchant settlement. These are infrastructure tests that banks have not replicated at comparable speed.
As one unnamed industry official told BloomingBit: "Chains such as Solana and Avalanche have advantages in liquidity and technical ecosystem, so there are limits to replacing them simply because a platform is a domestic company."
The blockchain selection reveals strategic fragmentation. BDACS chose Avalanche for KRW1. Shinhan Card partnered with Solana. Dunamu built GIWA Chain as an Ethereum L2 on the OP Stack (the same framework Upbit is using for its planned exchange L2). Fashion Group Hyungji partnered with Offchain Labs to deploy Arbitrum across 2,000+ retail stores.
Meanwhile, the domestic Kaia chain — purpose-built by Kakao — has failed to attract institutional adoption. Its stablecoin market cap of approximately $180 million ranks 29th globally, compared to Solana's $15.1 billion and Arbitrum's $3.8 billion. No major Korean financial institution has committed to building on Kaia.
The infrastructure choices carry economic implications. Global public chains offer liquidity depth and composability with existing DeFi protocols. Domestic chains offer regulatory proximity and data sovereignty. The market appears to be voting for global chains.
Boston Consulting Group partner Shin Seung-hwan has projected the global digital asset market growing from $0.6 trillion in 2025 to $18.9 trillion by 2033, with stablecoins reaching $1–4 trillion by 2030. South Korea is positioning to capture a share of that market, but the outcome depends on regulatory resolution.
The minimum capital requirement for fintech stablecoin issuers under current proposals is approximately 500 million won ($364,000) — a deliberately low threshold designed to enable market entry. All issuers would face 100% reserve requirements, meaning every circulating won stablecoin must be backed by equivalent assets.
The broader pattern is consistent across jurisdictions. The EU, the U.S. (via the GENIUS Act), Japan, Singapore, and now South Korea are all building stablecoin regulatory frameworks simultaneously. The difference in South Korea's case is urgency: $115 billion in documented capital flight creates a ticking clock that abstract policy debates cannot ignore.
President Lee Jae-myung campaigned on a pro-crypto platform that included spot Bitcoin ETFs and an explicit won-stablecoin ecosystem, framing it as a matter of monetary sovereignty. The political will exists. The institutional plumbing does not — yet.
South Korea's won-stablecoin race is a case study in what happens when capital flight forces a sovereign monetary response. The $115 billion that moved into dollar stablecoins in 2025 was not a speculative anomaly — it was 18 million people optimizing for yield, liquidity, and global access outside their central bank's reach.
The six competing issuers represent real infrastructure investment, not vaporware. KRW1 is live on Avalanche. Dunamu's GIWA Chain is processing bank settlement tests. Toss is contracting POS terminal deployments. But without regulatory clarity — specifically, resolution of the 51% bank ownership question — none of these products can scale to the volumes needed to repatriate the capital that has already left.
The clock is legislative. The June 3 elections will either accelerate or further delay passage of the Digital Asset Basic Act. Until then, South Korea's stablecoin economy remains a $115 billion problem with six partial solutions and no legal framework to connect them.