Tether and Circle Meet South Korea’s Banks as Stablecoin Bill Nears

Circle’s president, Heath Tarbert, has visited Seoul to meet executives from the country’s four biggest banks, KB Kookmin, Shinhan, Hana, and Woori, alongside policymakers, based on a report from local media. These high-level discussions are steering toward potential cooperation on USDC integration for domestic circulation, cross-border remittances, and the launch of won-pegged stablecoins.

Simultaneously, South Korea’s Financial Services Commission (FSC) plans to submit a robust stablecoin regulation bill to the National Assembly by October. Expected to cover issuance criteria, reserve requirements, and risk management protocols, the legislation signals a new approach to digital asset governance.

The private sector isn’t waiting. A consortium of eight major commercial banks, including KB Kookmin, Shinhan, Woori, Nonghyup, IBK, Suhyup, Citibank Korea, and SC First Bank, is working with the Open Blockchain and DID Association to develop a won-linked stablecoin. The target launch window is late 2025 to 2026, contingent on regulatory approval.

Digital-first players are getting in on the action too. KakaoBank has confirmed it’s exploring stablecoin issuance and custody services, with trademarks such as "BKRW" and "KRWB" already filed, they hint at potential won-backed offerings.

Yet, not everyone is on board with the rush. The Bank of Korea has urged a measured rollout, advocating that initially only rigorously regulated commercial banks should issue stablecoins. Deputy Governor Ryoo Sang-dai warned that broader access could undermine monetary control and financial stability if left unchecked. Similarly, Governor Rhee Chang-yong cautioned that allowing non-bank issuers risks chaotic financial dynamics, an allusion to past eras of unregulated private currency issuance.

The political backdrop amplifies the momentum. President Lee Jae-myung’s pro-crypto stance and legislative pushes for won-based stablecoins have invigorated the market. The Kospi index reflects this optimism—fintech stocks like KakaoPay have surged, while leveraged retail crypto investments are becoming increasingly common.

Internationally, South Korea isn’t alone. China is weighing yuan-backed stablecoins to expand its currency footprint, while Japan and Hong Kong advance similar regulatory agendas. In this regional context, Seoul’s approaching stablecoin framework could position it as an innovation bellwether.

The direction of reform is already clear. A comprehensive stablecoin legal framework is imminent, with the FSC expected to introduce its bill to lawmakers in October. At the same time, at least one major banking consortium is building its own model for a won-stablecoin, showing how quickly the private sector is mobilizing.

Fintech firms, especially KakaoBank, are preparing to follow suit, potentially expanding issuance and custody services to retail markets. The Bank of Korea, however, is pressing for restraint, emphasizing that only heavily regulated institutions should take the lead in the early stages to protect monetary stability. Retail enthusiasm and large-scale outflows of dollar-backed stablecoins are only increasing pressure on policymakers to act quickly.

What remains uncertain are the exact details of implementation. Policymakers have not yet defined reserve requirements, issuance rules, or the scope of eligible participants. While Circle has engaged with South Korean banks and regulators, it is still unclear whether foreign issuers will be allowed to play a direct role if authorities prioritize domestic control.

Another unresolved issue is how non-bank fintech players will be treated under the framework, particularly given the Bank of Korea’s push to limit issuance initially to licensed commercial banks. Ultimately, the viability of won-backed stablecoins will hinge not only on regulatory approval but also on their ability to compete with dollar-pegged incumbents like USDT and USDC, which dominate global liquidity.

South Korea’s stablecoin ambitions capture both the promise and tension of the digital finance era. The country is moving to anchor its financial sovereignty in blockchain, while ensuring safeguards are in place to prevent systemic risk. The months ahead will determine whether Seoul’s initiative becomes a blueprint for responsible adoption or a cautionary tale of regulatory overreach. Either way, the experiment unfolding in one of the world’s most digitally connected nations will have global implications for how stablecoins are governed, adopted, and trusted.