KRW1 is a fiat-collateralized stablecoin pegged 1:1 to the South Korean Won (KRW). Issued by the South Korean digital asset custodian BDACS, the stablecoin was launched in a proof-of-concept phase on the Avalanche blockchain and is fully backed by KRW reserves held in a segregated escrow account at Woori Bank, a Tier 1 South Korean commercial bank. ^{[5] [6] [1]}

Overview

KRW1 was developed by Busan Digital Asset Custody Services (BDACS) as a "sovereign-aligned, regulator-ready" digital currency designed to demonstrate the technical and regulatory infrastructure for a fully commercial Korean Won stablecoin. ^{[5] [7]} The project was introduced on September 18, 2025, following the successful completion of a proof-of-concept (PoC) validation with its banking partner, Woori Bank. At the time of its announcement, KRW1 was in a pilot phase and not available for public circulation, with its use restricted to technology demonstration purposes pending the finalization of South Korea's Digital Asset Basic Act, which is anticipated for implementation in 2026. ^{[6] [2]}

The launch of KRW1 is positioned as a significant step toward regulated, bank-integrated digital currency in South Korea, a market that processed over ₩57 trillion (approximately $41 billion) in stablecoin transactions in the first quarter of 2025 alone. ^[7] BDACS developed a comprehensive framework for the stablecoin, which includes systems for issuance and management, as well as a user-facing application that supports peer-to-peer transfers and transaction verification. During the PoC phase, the 15,000,000 KRW1 in circulation is held exclusively in wallets controlled by BDACS and is backed by the company's own "house capital." ^[5] By launching ahead of the country's formal stablecoin legislation, BDACS established an early presence in the emerging domestic market. The project aims to leverage its institutional backing from Woori Bank and its partnership with a global blockchain network to build a foundational infrastructure for the digital asset market in the region. ^[4]

In a statement regarding the project's market position, BDACS noted its competitive advantage while also signaling an open approach to collaboration: "While large tech companies may eventually enter the market, KRW1 is already operational with strong institutional backing from Woori Bank and global blockchain partners. This combination provides infrastructure depth that big tech alone cannot match. BDACS sees these firms as potential collaborators rather than competitors.” ^{[6] [4]}

History

The development of KRW1 began with foundational legal steps, with BDACS completing the trademark registration for the "KRW1" brand in December 2023. ^[6] This was followed by a period of technical development and partnership-building, culminating in a successful proof-of-concept check on its fund management system in collaboration with Woori Bank, which was an active participant in the PoC. This validation confirmed the technical framework for minting, managing reserves, and connecting to the bank's systems in real-time. ^{[5] [6] [3]}

The official launch of KRW1 on the Avalanche network was announced on September 18, 2025. The announcement positioned KRW1 as the first Korean Won-backed stablecoin launched by a South Korean custodian on a major global blockchain. The launch occurred in a market that had seen prior exploration of won-pegged stablecoins. In August 2025, a pilot for a stablecoin named KRWIN was introduced by fanC and Initech, serving as a precursor in the domestic stablecoin space. However, KRW1's launch was distinguished by its direct integration with a major financial institution, Woori Bank, for reserve custody. ^{[2] [1] [4]}

Technology

Reserve Model and Transparency

KRW1 is designed as a fully collateralized stablecoin under a full-reserve model, with each token intended to be backed 1:1 by an equivalent amount of South Korean Won. The fiat reserves are held in a dedicated, segregated escrow account at Woori Bank. This structure is designed to be "bankruptcy-remote," ensuring that user funds are protected from BDACS's operational capital and that each KRW1 token is redeemable for one KRW. ^{[7] [1]}

To maintain transparency and accountability, the system incorporates a real-time banking API that connects directly to Woori Bank's systems, allowing for instant verification of the fiat reserves backing the circulating supply of KRW1. For its future commercial launch, BDACS plans to implement a comprehensive transparency framework that includes monthly bank-verified attestations, semi-annual independent audits by a top-four accounting firm, and a public-facing dashboard for real-time reserve verification. During the PoC phase, however, formal attestations and audits are not conducted on a recurring basis. ^{[5] [7]}

Technical Architecture

KRW1 was initially launched on the Avalanche blockchain. According to BDACS, Avalanche was selected for its high-performance capabilities, security, and scalability. The platform's reliability was also cited as a key factor, particularly for its potential use in public-sector applications, as it has been recognized by Korea's Internet & Security Agency (KISA) for its reliability. ^{[6] [3]}

BDACS developed what it describes as a "full-stack framework" to support the stablecoin's entire lifecycle. This infrastructure includes:

• Multi-Chain Design: The architecture is built to operate across multiple Ethereum Virtual Machine (EVM)-compatible blockchains, supporting deployment on both public networks and permissioned institutional ledgers. ^[7]
• Institutional-Grade Custody: BDACS employs a hybrid custody model combining Multi-Party Computation (MPC) for operational security with air-gapped cold wallets for long-term storage. The custody infrastructure is ISMS and ISO 27001-certified. ^{[5] [7]}
• Compliance and User Protection: Access to KRW1 during the PoC is managed through an "allowlist" of pre-approved wallets. The system integrates wallet-level KYC/AML enforcement, automated transaction monitoring, and sanctions screening aligned with Financial Action Task Force (FATF) guidelines. Smart contracts are built using an upgradeable proxy pattern to allow for security patches and enhancements. ^[7]
• Token Lifecycle: The process is strictly controlled, beginning with KYC/AML onboarding for verified entities. Fiat KRW is deposited into the segregated reserve account, after which KRW1 tokens are minted on a 1:1 basis and sent to the user's allow-listed wallet. Redemption involves sending tokens to a burn address, which triggers the release of the equivalent fiat KRW back to the user's bank account. ^[7]

Roadmap and Future Development

BDACS has stated its intention to expand the availability of KRW1 to other blockchain networks beyond Avalanche to enhance interoperability. ^[6] The project's roadmap is divided into two main phases:

1. Proof-of-Concept (2025–2026): This phase focuses on validating the technical and operational framework, integrating with banking partners, running live transaction simulations, and preparing for formal audits.
2. Commercial Issuance (Post-2026): Following the expected implementation of the Digital Asset Basic Act, BDACS plans a full public launch, expansion of its banking network, and integration with fintech platforms, merchants, and DeFi protocols.

Long-term technology goals include ensuring KRW1 is interoperable with a potential Bank of Korea central bank digital currency (CBDC), integrating zero-knowledge proof modules for privacy-preserving compliance, and expanding its role as a settlement asset for tokenized real-world assets (RWAs). ^[7]

Use Cases

KRW1 is designed for a broad range of applications across individual and institutional finance. ^[5]

For Individuals

• Everyday Payments: To be used for faster, lower-cost digital payments for retail and online shopping.
• Travel & Tourism: To allow tourists to pay seamlessly in a KRW-denominated token, avoiding high foreign exchange fees.
• K-Culture & Entertainment: To power microtransactions for music, gaming, and live events.
• Remittances: To enable near-instant international money transfers at a lower cost than traditional wire services.

For Institutions

• Treasury Management & Settlement: To manage corporate liquidity, pay suppliers, and settle transactions in real-time.
• Cross-Border Payments: To reduce currency risk and settlement costs in international trade by transacting directly in KRW1.
• Crypto Capital Market Access: To provide stable KRW trading pairs for exchanges and liquidity for DeFi lending markets.
• Asset Tokenization: To serve as a stable anchor for issuing and settling tokenized securities, bonds, and other real-world assets.

These use cases are intended to leverage the benefits of blockchain technology to improve upon traditional financial systems. ^{[5] [7]}

Governance and Risk Management

For its commercial phase, BDACS plans to establish a multi-layered governance framework to ensure robust oversight and risk management. This structure is designed to include a Steering Committee of senior executives and banking partners, a dedicated Risk & Audit Committee, and an External Advisory Board of regulatory and technology experts. ^[7]

The project's risk management framework addresses several key areas:

• Cybersecurity Risk: Mitigated through regular smart contract audits, intrusion detection, and the hybrid MPC/cold wallet custody architecture.
• Market & Liquidity Risk: Addressed by maintaining full fiat backing and ensuring real-time reconciliation between the token supply and bank reserves.
• Regulatory Risk: Managed through continuous monitoring of the evolving legal landscape and the use of flexible, upgradeable compliance modules.
• Operational & Settlement Risk: Controlled via automated transaction logging, API-level reconciliation with banking partners, and disaster recovery planning.

This framework is intended to align KRW1 with international best practices for stablecoin oversight and build trust with users and regulators. ^[7]

Key Entities and Partnerships

Several key organizations are involved in the development and operation of KRW1:

• BDACS (Busan Digital Asset Custody Services): The primary issuer and developer of the KRW1 stablecoin. The company is a South Korean digital asset custodian led by CEO Harry Ryoo.
• Woori Bank: A major South Korean financial institution that serves as the custodian for the fiat reserves backing KRW1. The partnership provides institutional credibility and ensures the secure holding of collateral.
• Ava Labs: The development company behind the Avalanche blockchain, the initial network for KRW1. Justin Kim is the Head of Asia at Ava Labs.

These partnerships form the core of the KRW1 ecosystem, combining expertise in digital assets, traditional banking, and blockchain technology. ^{[6] [1] [3]}

Regulatory and Market Context

The launch of KRW1 occurred amidst an evolving regulatory landscape for digital assets in South Korea. The government is expected to enact the Digital Asset Basic Act, with implementation commencing in 2026, which will provide clear rules for the issuance and use of stablecoins. ^[7] The administration of President Lee Jae Myung has expressed support for the development of local currency-pegged stablecoins as a means of enhancing monetary sovereignty. ^[2]

However, regulatory bodies have voiced differing opinions on the matter. The Bank of Korea, the country's central bank, has advocated for limiting the issuance of local stablecoins to licensed banking institutions to mitigate potential financial instability and systemic risk. This has led to a dynamic environment where private firms like BDACS are innovating while anticipating future regulatory requirements. ^[4]

The legislative process has seen competing proposals from the country's major political parties. The Democratic Party's bill includes an explicit ban on paying interest for stablecoin deposits and sets a minimum capital requirement of $3.6 million for issuers. In contrast, the ruling People Power Party's legislation does not include an interest ban, focusing instead on licensing and disclosure rules. Both proposals, however, agree on the need for full reserve backing and enhanced oversight by the Bank of Korea. The debate over these details highlights the challenge for policymakers. Rich O., APAC regional manager at OneKey, noted that Korea’s stablecoin rules need a “balanced approach,” weighing monetary sovereignty and consumer protections against the risk that “excessive restrictions” could weaken the country's competitiveness in the digital asset space. ^[3]

The market for won-backed stablecoins is also becoming increasingly competitive. Nine major commercial and online banks, including Kakao Bank and KB Kookmin Bank, have announced intentions to launch their own won-backed stablecoins. ^[7] The launch of KRW1 also occurs within a broader regional trend, as other Asian economies advance their own stablecoin projects. In Japan, JPYC is expected to receive regulatory approval, while Ripple and SBI Holdings plan to launch the RLUSD stablecoin by 2026. Similarly, the Hong Kong unit of the Bank of China has reportedly considered applying for a stablecoin issuer license. ^{[5] [3]}

Quotes

• Harry Ryoo, CEO of BDACS: "BDACS is not just a custody service provider. We are building the backbone of the digital asset market, serving corporate, institutional, and public-sector partners alike. KRW1 marks a pivotal moment for our company, and we are confident it will become a foundational asset of the digital economy." ^[6]
• Justin Kim, Head of Asia at Ava Labs: "The successful test pilot of KRW1 demonstrates the need for a highly-performant and reliable blockchain tailored for a regulatory-compliant stablecoin. Avalanche’s technology and its growing ecosystem of real-world assets will help BDACS and Woori Bank build a robust, innovative solution for Korea’s digital economy." ^[6]
• BDACS Statement: "Currently in a pilot phase following a full PoC, KRW1 marks an important step toward regulated, bank-integrated digital money in Korea." ^[5]