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The BDACS of South Korea, in collaboration with Woori Bank, has launched the first stablecoin pegged to the South Korean won. The new token, KRW1, is constructed upon the Avalanche blockchain and is in the pilot stage.
KRW1 is pegged at a 1:1 ratio to Korean won in escrow at Woori Bank. BDACS stated that the stablecoin would have a low-cost settlement system that can be used by public programs such as emergency relief payments. The project will reduce the cost of transactions and enhance efficiency for the government and financial institutions.
BDACS states that KRW1 is more than market-oriented and may be a technical unit of South Korean stablecoins. The company has also developed a framework that includes issuance, management, and a user application that facilitates peer-to-peer transfers and transaction confirmation.
KRW1 comes before the regulatory environment anticipated by the South Korean Financial Services Commission (FSC). The officials will issue the stablecoin issue and distribution regulations at the start of the subsequent quarter.
Competitor bills are some of the bills already suggested by lawmakers, like those in July. The bills will detail the publication of stablecoins and the possibility of different banks and non-bank companies controlling them. The Virtual Asset Committee, established by the FSC in November 2024, will complete the next phase of regulation by the end of 2025.
The major banks, such as Shinhan, Hana, KB Financial Group, and Woori, have been talking to stablecoin issuers, including Tether and Circle. It has been reported that they have met with the president of Circle, Heath Tarbert, in readiness for regulatory certainty in the local institutions.
BDACS CEO Harry Ryoo opined that the company is establishing the infrastructure of the digital asset market, both corporate and institutional, as well as to the general public. He named KRW1 one of the turning points for the company and a move towards incorporating digital resources into the South Korean economy.
The pilot is guided by the common trends worldwide, where central banks and financial institutions are experimenting with the notion of blockchain-based settlements. Japan, Singapore, and Hong Kong are also developing their digital currency projects, and South Korea is making KRW1 one of the first movers in the domestic market.
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