Korea’s Onshore Controls Stall Won Stablecoin Ambitions
South Korea has shelved its central bank digital currency (CBDC) pilot in favor of private-sector alternatives. Banks and fintech firms like KakaoBank and Upbit are exploring Won stablecoin issuance. However, strict onshore trading rules mean any Won stablecoin must operate within domestic, KYC-approved addresses. This preserves the Bank of Korea’s oversight of currency flows.
Domestic payments in Korea already settle instantly, free, and round-the-clock, leaving little room for a Won stablecoin to improve speed or cost. The primary benefit would be cross-border settlement, yet the onshore-only regulation blocks offshore use. Taiwan faces a similar dilemma with its NTD stablecoin framework. In contrast, a Hong Kong Dollar stablecoin could freely circulate abroad.
As a result, a KRW stablecoin will likely remain a niche product for domestic use, with limited impact on the global crypto market.
Neutral
The strict onshore trading rules significantly limit the utility of any Won stablecoin, confining its use to domestic, KYC-approved addresses. Domestic payments in South Korea already settle instantly and free of charge, offering no speed or cost advantage for a Won stablecoin. Cross-border functionality, the primary benefit of stablecoins, is blocked by regulation. Similar frameworks in Taiwan have yielded niche, localized products. Without global circulation or a clear improvement over existing systems, a KRW stablecoin is unlikely to move market sentiment or trading volumes. Thus, its impact on the crypto market is expected to be neutral in both the short and long term.