South Korea'S Won Stablecoin Race Intensifies As $115b Flees To Dollar Coins

A National Priority — and a $115B Problem

South Korea's President Lee Jae-myung has elevated a Korean won-pegged stablecoin to a national policy priority, pointing to an estimated $115 billion in capital that flowed out of domestic crypto exchanges and into dollar-backed coins in 2025. A KRW stablecoin became a prominent policy issue during the 2025 presidential election, when institutionalising a won-denominated stablecoin was a key campaign pledge of President Lee Jae-myung. In the first quarter of 2025 alone, roughly $40 billion leaked out of South Korean crypto exchanges, with most of it flowing into foreign dollar-backed stablecoins.

The urgency is sharpened by a persistent market distortion: capital controls that once kept the won market insulated have instead created the so-called Kimchi Premium — a persistent price gap between Korean and global exchanges that periodically surges above 10%. $USDT currently trades at roughly a 5% premium on Korean platforms, a spread that underlines how deep local demand for dollar liquidity runs.

In response, major South Korean banks announced a joint effort to develop a stablecoin pegged to the Korean won, with the token expected to launch in late 2025 or early 2026. Fintech rivals are not waiting. Kakao, Toss, BC Card, and Shinhan are all building competing infrastructure. Kakao Group has announced plans to build a Korean-won stablecoin ecosystem, connecting KakaoPay, KakaoBank, and KakaoTalk into a unified digital wallet.

Naver's $10.3B Bet and the Regulatory Deadlock

The most consequential corporate move in the space belongs to Naver Financial. Naver Corp. agreed to acquire Dunamu Inc., operator of South Korea's biggest crypto exchange Upbit, in an all-stock deal valued at around $10.3 billion — a transaction that would place the world's fourth-largest exchange by volume inside one of Korea's largest internet groups. Shareholders of both companies will vote on the deal at general meetings on May 22, 2026. The stock exchange portion of the transaction is planned for June 30, 2026, pending approvals from the Korea Fair Trade Commission and other regulators. Analysts see a direct path to a won-backed stablecoin built on Dunamu's blockchain capability and plugged into the everyday utility of Naver Pay, with plans to embed these assets directly into payment flows, rewards systems, lending, and online commerce.

Holding up the entire market is a regulatory standoff between two of Korea's most powerful financial institutions. The Bank of Korea has argued that only banks with majority 51% ownership should be permitted to issue stablecoins, on the grounds that financial institutions are already subject to stringent solvency and anti-money-laundering requirements. The Financial Services Commission takes a more flexible view, warning that a strict 51% rule could stifle competition and block fintech firms with the technical expertise to build scalable blockchain infrastructure.

The Digital Asset Basic Act, introduced in June 2025, creates a comprehensive legal framework for digital assets distinguishing between general digital assets and asset-linked digital assets — the latter category covering stablecoins and requiring licensing from the FSC. This bureaucratic split is the single biggest reason the Digital Asset Basic Act was delayed from late 2025 into 2026. The legislation is expected to clear the National Assembly this quarter and, when it does, it stands to reshape stablecoin flows across Asia for years to come.

Sources
Bloomberg — Naver to Acquire Crypto Exchange Upbit's Parent Dunamu
CoinDesk — South Korea's Digital Asset Bill Delayed Over Who Can Issue Stablecoins
Law.Asia — Guide to Korea's Stablecoin Regulation Framework

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