South Korea-based crypto custody company BDACS has announced KRW1, the country's first local currency-collateralized stablecoin on the Avalanche network. The project, which is still in the proof-of-concept (PoC) phase, has not yet been released to the public due to regulatory uncertainty.
According to a statement released by the company on Thursday, KRW1 is fully backed by South Korean won. BDACS stated that its technical feasibility has been successfully tested and that they chose Avalanche for its reliability and success in public sector applications.
Each KRW1 token is 100% collateralized by won assets held at Woori Bank, one of the country's largest financial institutions. The integration with the bank allows users to verify their proof of reserves in real time. BDACS emphasized that they have created a transparent reserve structure using Woori's API infrastructure.
The company also announced that it has developed a framework that goes beyond token issuance. In this context, a mobile application has been developed, including the stablecoin's issuance and management systems, allowing users to make peer-to-peer transfers and verify transactions.
KRW1's goals include not only local use but also global adoption as a payment, investment, remittance, and deposit tool. In the long term, BDACS plans to launch this stablecoin in the public sector. KRW1 is planned to be tested specifically in emergency aid payments and local payment systems.
Beyond Avalanche, BDACS aims to make KRW1 available on various blockchains. To this end, it is also exploring collaboration opportunities with US dollar-backed stablecoins such as USDT and USDC.
Stablecoin Regulatory Uncertainty in South Korea
BDACS's launch comes at a time when the country's legal framework is still unclear. There are no specific regulations for stablecoins in South Korea, but the government is actively working in this area.
President Lee Jae Myung advocates for supporting the local currency-pegged stablecoin market. Myung, emphasizing the importance of this for maintaining monetary policy sovereignty in the digital finance era, has facilitated the introduction of various bills in parliament.
In contrast, the South Korean Central Bank believes that stablecoin issuance should be restricted to licensed banks only. The bank states that unregulated digital assets could undermine financial stability.
BDACS's Strategic Position
While BDACS is still piloting the KRW1 project, it aims to play a leading role in the market once regulations are clarified. The company stated that it has a strong institutional infrastructure thanks to its collaboration with Woori Bank and global blockchain partnerships such as Avalanche, and that it views major technology companies as partners rather than potential competitors.
According to the company's vision, KRW1 could become a significant stablecoin in the global digital economy. However, the biggest obstacle to this is likely to be the clarification of the country's stablecoin regulations.
Following the development, the price of Avalanche's AVAX coin rose by 10 percent to $32.6.
