South Korea Enters Stablecoin Market with KRW1 on Avalanche

South Korea’s crypto custody provider BDACS announced on Thursday the launch of KRW1, a stablecoin fully backed by the South Korean won, on the Avalanche blockchain.

In a press release, BDACS confirmed that it had successfully completed a full proof-of-concept (PoC) validating KRW1’s technical feasibility. The company highlighted that it chose Avalanche for its proven reliability and security in public-sector applications.

Every KRW1 token is fully collateralized with won reserves held at Woori Bank, one of South Korea’s largest financial institutions. BDACS emphasized that the integration of real-time banking APIs with Woori ensures transparent and verifiable proof of reserves.

“The launch goes well beyond mere token issuance,” the company stated. “BDACS has built a comprehensive ecosystem, including issuance and management systems, along with a user-facing application that supports peer-to-peer transfers and transaction verification.”

BDACS aims to establish KRW1 as a stablecoin with global utility for remittances, payments, investments, and deposits, while also planning future applications in public-sector systems, such as emergency relief disbursement settlements.

The company also intends to expand KRW1 to additional blockchain networks to enhance interoperability and is exploring partnerships with U.S. dollar-backed stablecoins such as USDT or USDC.

However, BDACS noted that KRW1 is still at the PoC stage, meaning it is not yet publicly circulated and remains compliant with local regulations. South Korea currently lacks a formal regulatory framework for stablecoins, though efforts to establish one are ongoing.

President Lee Jae Myung has expressed support for a domestic stablecoin market pegged to the national currency to strengthen monetary sovereignty in the digital finance era. Meanwhile, lawmakers continue discussions on multiple stablecoin-related bills. This regulatory momentum has led many local financial institutions to prepare their own stablecoin initiatives, including trademark filings for token symbols.

Despite this, the central bank has emphasized that the issuance of domestic stablecoins should be restricted to licensed banking institutions to prevent potential financial instability from an uncontrolled influx of new digital currencies.

BDACS stated that it is strategically positioning itself as a leading player in South Korea’s emerging local stablecoin market.

"Although major tech companies may enter the space in the future, KRW1 is already operational with solid institutional backing from Woori Bank and global blockchain partners,” the company said. “This combination provides robust infrastructure that large tech firms alone cannot replicate. BDACS views these companies as potential partners rather than competitors".