Introduction to KRW1
In a significant move for the South Korean digital economy, BDACS has debuted the country’s first stablecoin backed by the Korean won on the Avalanche blockchain. Known as KRW1, this innovative digital currency is entirely collateralized by Korean won deposits that are securely held in custody by Woori Bank.
Details of the Launch
The Avalanche blockchain shared insights about KRW1 through its social media account on X, emphasizing that each KRW1 token is pegged 1:1 to the won deposited in an escrow account at Woori Bank. This launch occurs after BDACS successfully completed a comprehensive proof of concept (PoC), confirming the stablecoin’s technical capability.
Impact on Digital Banking
Currently operating in a pilot phase, KRW1 is poised to facilitate a more regulated and integrated digital banking framework within South Korea. Avalanche highlighted its role in bridging banks, users, and institutions, positioning BDACS to influence the future of the nation’s digital financial landscape.
Support from Avalanche
Justin Kim, Ava Labs’ Head of Asia, underscored Avalanche’s support in creating a robust and scalable blockchain infrastructure to help BDACS and Woori Bank deliver pioneering solutions for South Korea’s economy.
The collaboration illustrates the growing synergy between traditional finance and blockchain technology, as evidenced by a week prior when Avalanche revealed plans to set up two AVAX reserve companies in the United States.
Trademark Registration and Future Plans
To bolster its stablecoin initiative, BDACS secured trademark registration for KRW1 in December 2023. Though BDACS primarily serves as a digital asset custodian, CEO Harry Ryoo stated the company aims to establish a foundational infrastructure for the digital asset sector, catering to various partners in corporate, institutional, and public sectors.
Cost-Effective Payment System
Plans are in place to utilize KRW1 as a cost-effective payment and settlement system, enhancing efficiency by reducing transaction fees. The comprehensive framework developed by BDACS encompasses not only the issuance and management of KRW1, but also ensures real-time API integration for immediate verification of reserves.
Growing Interest in Stablecoins
The interest in stablecoins is gaining traction in South Korea, with several traditional financial institutions, including Kakao Bank, Kookmin Bank, and the Industrial Bank of Korea, already applying for corresponding stablecoin trademarks. Additionally, discussions between Tether executives and Shinhan Bank, a major player in South Korea’s financial sector, signify a growing recognition of stablecoins in the region.
