Circle’s Arc Blockchain Welcomes South Korea’s First Won-Pegged Stablecoin KRW1 by BDACS
In a significant step toward integrating South Korea into the expanding global stablecoin ecosystem, Busan-based digital asset custodian BDACS has announced a strategic collaboration with Circle to issue a new won-backed stablecoin, dubbed KRW1. This initiative positions South Korea alongside countries like Japan, Brazil, Mexico, and the Philippines, which have already begun experimenting with national stablecoins on Circle’s blockchain platform Arc.
The partnership between BDACS and Circle was formalized through a memorandum of understanding (MOU), establishing a cooperative framework aimed at deploying KRW1 on the Arc blockchain. Circle’s Arc, recently launched in public testnet, is designed as a next-generation economic infrastructure layer for the internet, promising enhanced interoperability and scalability for national and fiat-pegged digital assets.
Ryu Hong-yeol, CEO of BDACS, emphasized the potential of the initiative, stating that the collaboration is a pivotal moment for South Korea’s financial innovation. “By issuing KRW1 on Arc, we are enabling Korean businesses to participate in a truly global and interoperable stablecoin network,” he noted. BDACS had already taken steps toward this initiative by registering the KRW1 trademark in December 2023, laying the legal foundations for its future development and issuance.
Arc’s public testnet has quickly gained traction, with participation from over 100 major global institutions, including financial heavyweights such as BlackRock, Goldman Sachs, Visa, Mastercard, and State Street. These companies are exploring Arc’s capabilities, which include predictable, US dollar-based transaction fees, sub-second finality, and optional privacy features. The platform also facilitates seamless use of Circle’s USDC and other fiat-linked tokens.
Circle describes Arc as an “Economic Operating System for the internet”—an infrastructure layer that aims to directly connect traditional financial systems to blockchain networks. Its design is focused on compliance, predictability, and operational efficiency, attributes that are crucial for stablecoin issuers operating in regulated environments.
The introduction of KRW1 on Arc is particularly noteworthy given South Korea’s cautious approach to cryptocurrency regulation. The country has recently intensified its oversight of digital assets, including the seizure of crypto holdings and targeting of cold wallets. Against this regulatory backdrop, BDACS’s initiative may help establish a compliant and transparent model for digital Korean won issuance.
However, not all experts agree with how the country is approaching stablecoin development. Sangmin Seo, Chair of the Kaia DLT Foundation, voiced criticism of the Bank of Korea’s (BOK) proposal to assign exclusive stablecoin issuance rights to traditional banks. While the central bank argues that banks are better equipped to handle risks due to their adherence to strict regulatory frameworks like AML and foreign exchange controls, Seo counters that this approach is overly restrictive and illogical. He advocates for a more inclusive system where both banking and non-banking entities can issue stablecoins, provided they meet clearly defined regulatory criteria.
This debate highlights a broader global conversation about who should control stablecoin issuance—traditional financial institutions or innovative fintech and blockchain firms. South Korea’s decision on this matter could set a precedent for other countries navigating the same regulatory waters.
The inclusion of KRW1 in Arc’s ecosystem also has larger implications for cross-border payments and financial interoperability. With stablecoins pegged to various national currencies coexisting on a single blockchain, Arc could become a hub for instant currency conversion and international remittances with reduced fees and higher transparency.
Moreover, the move may spur innovation in sectors such as decentralized finance (DeFi), where national stablecoins can serve as foundational building blocks for lending, borrowing, and trading protocols. The availability of a won-pegged token could encourage Korean developers and startups to create DeFi applications tailored for local users, while still remaining globally interoperable.
There’s also a growing interest in how national stablecoins like KRW1 can be integrated into central bank digital currency (CBDC) initiatives. While South Korea is still in the exploratory phase of its CBDC development, stablecoin experiments like KRW1 could provide valuable technical insights and user feedback that inform future government-led digital currency strategies.
In addition, the rise of national stablecoins may help bridge the gap between traditional finance and emerging blockchain-based ecosystems. By offering a stable, transparent, and compliant representation of fiat currencies, these tokens provide a gateway for institutional investors wary of crypto volatility but interested in blockchain’s efficiency and programmability.
As stablecoin adoption accelerates globally, partnerships like the one between BDACS and Circle could catalyze broader financial transformation. South Korea’s KRW1 may be just the beginning of a wave of innovations that reshape how value moves across borders, how people access financial services, and how governments rethink monetary policy in the digital age.
In conclusion, the launch of KRW1 on Circle’s Arc isn’t just a technical milestone—it’s a strategic move that could influence how South Korea and other nations approach digital currency integration. With regulatory frameworks evolving and blockchain infrastructure maturing, the world may soon witness a new era where national currencies coexist seamlessly on decentralized networks, reshaping the global financial landscape.