South Korea Scrambles as $115B Flows Into Dollar Stablecoins

• South Korean investors moved $115.3 billion to overseas exchanges in 2025, weakening the won below 1,500 per dollar.
• Local stablecoin holdings dropped 55% as capital shifted to semiconductor stocks.
• Tensions between FSC and the Bank of Korea led to the formation of a bank-led consortium to issue a stablecoin.

South Korea is grappling with a huge outflow of digital capital to international markets. Over the past year, investors have moved close to USD 115 billion into USD-pegged stablecoins. This leakage compromises the local Won, and interferes with the domestic crypto economy.

Winning the Race for Won-Backed Stablecoins

South Korea’s President Lee Jae-myung has made a Korean won-pegged stablecoin a national policy goal, citing an expected $115 billion in wealth flowing from domestic crypto exchanges to dollar-backed currencies by 2025. 

In addition, a KRW stablecoin emerged as a major policy topic during the 2025 presidential election, when President Lee Jae-myung pledged to establish a won-denominated stablecoin. 

In the first quarter of 2025 alone, almost $40 billion flowed out of South Korean cryptocurrency exchanges. The majority of it moved into foreign dollar-backed stablecoins. 

In response, prominent South Korean banks announced a collaboration to create a stablecoin pegged to the Korean won. The token was set to emerge in late 2025 or early 2026. 

Moreover, Fintech competitors aren’t waiting. Kakao, Toss, BC Card, and Shinhan are all developing competitive infrastructure. 

Kakao Group has revealed plans to create a Korean won stablecoin ecosystem that will integrate KakaoPay, KakaoBank, and KakaoTalk into a single digital wallet. 

New Frameworks for Regulated Stablecoins

A clear conflict defines the future regulatory course. The Financial Services Commission (FSC) has removed dollar stablecoins from its business investment standards, indicating a strategic shift toward a won-denominated digital payment system. 

This establishes a clear path for institutional crypto adoption. 

However, the Bank of Korea has issued a strong warning that such a move could backfire. They noted that won-denominated stablecoins could be used to circumvent capital controls. 

Naver Financial has made the most significant business move in this industry. 

Besides, Naver Corp has agreed to acquire Dunamu Inc., the operator of South Korea’s largest cryptocurrency exchange, Upbit, in an all-stock transaction valued at roughly $10.3 billion, bringing the world’s fourth-largest exchange by volume into one of Korea’s largest internet groups. 

Both firms’ shareholders will vote on the merger at their general meetings on May 22, 2026. 

In the meantime, the stock exchange element of the transaction is scheduled for June 30, 2026, pending clearance by the Korea Fair Trade Commission and other regulators. 

Sustaining Growth in the Korean Crypto Ecosystem

Security is the priority of these new financial service providers. Banks are investing heavily in multi-signature wallets and cold storage solutions. 

However, they want to ensure that all the won-backed tokens are fully auditable. This emphasis on safety will probably attract more conservative retail investors.

Furthermore, the global community is observing South Korea’s radical regulatory experiment. Should this be successful, this model might be exported to other emerging markets.

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