Offshore Won Stablecoins Gain Ground as Korea Delays Regulatory Framework

Two separate Korean won-linked stablecoin initiatives have launched outside Korea in the past six months—an outcome that underscores a growing contradiction: while Seoul debates who should be allowed to issue a won stablecoin, the won is being tokenized, traded, and even packaged into derivatives abroad.

The most recent catalyst came on April 30 (UTC), when global crypto payments firm MoonPay announced a partnership with Woori Bank to build global distribution infrastructure for a won-denominated stablecoin. The announcement followed the offshore debut of KRWQ, a won-pegged stablecoin issued in October last year by blockchain firm IQ and stablecoin protocol Frax. Bloomberg highlighted the project after Wall Street-backed crypto exchange EDXM International pointed to KRWQ as the base layer for a planned won perpetual futures product.

That sequence—issuance first, institutional plumbing second, derivatives next—illustrates how quickly stablecoin markets can develop once an asset gains liquidity and credible rails. It also places Korea in an awkward position: despite being one of the world’s most active crypto markets, it still has no won stablecoin minted under a domestic regulatory framework.

At the center of Korea’s delay is a stalled legislative push. Won stablecoin legalization is expected to be addressed in the second phase of the country’s planned Digital Asset Basic Act. However, the bill has been stuck for more than a year amid disputes over the ‘issuer question’—specifically, what kind of entity should be permitted to issue a won stablecoin and under what ownership structure.

The Bank of Korea has argued that only a consortium with banks holding at least 51% of equity should be allowed to issue a won stablecoin, citing the need to protect monetary stability. The Financial Services Commission broadly agrees with tighter safeguards but has been cautious about hard-coding ownership ratios into law. Fintech and blockchain firms view a bank-majority rule as a de facto barrier to private-sector entry. Complicating matters further, positions among the Financial Services Commission, the Bank of Korea, the Ministry of Economy and Finance, and the National Assembly have not aligned.

Korean lawmakers had previously signaled that a bill could be introduced in 2025, but that timeline slipped. With local elections expected in June 2026, the legislative calendar is again uncertain—an opening that offshore markets have exploited.

Globally, stablecoin policy has moved in the opposite direction: toward implementation. The U.S. enacted the GENIUS Act in July last year, establishing a comprehensive federal framework for stablecoins. In the European Union, regulators operating under the MiCA regime have authorized multiple stablecoin issuers, many of them non-bank ‘electronic money institutions’ rather than traditional lenders. Japan and Singapore have also created pathways for domestic stablecoin issuance. Korea, by contrast, remains locked in a prolonged debate over ‘who issues,’ even as other jurisdictions focus on how issuance is supervised and integrated into financial infrastructure.

The offshore won stablecoin projects now serve as proof-of-concept for what Korea has not yet enabled at home. KRWQ is already live on Ethereum (ETH) and Coinbase’s Base network. Its operators publish a real-time dashboard showing a reported reserve ratio of 122.8%, and Shinhan Securities is involved as a custodian for Korea Treasury Bonds (KTB), according to the column. EDXM International, meanwhile, has positioned its won perpetual futures offering as cheaper than traditional non-deliverable forwards (NDF), claiming cost reductions of 50% to 75% compared with existing structures.

MoonPay’s approach highlights another dynamic: regulatory leverage. The company points to credentials that include EU MiCA authorization as well as New York crypto licensing and trust-related approvals, while forming a consortium involving Korea’s major commercial banks. The implication is clear—if domestic rules remain unresolved, offshore entities with established compliance footprints can still build ‘global distribution’ first and pull Korean bank participation into that orbit later.

There is also a data and liquidity dimension that policymakers increasingly worry about. The longer Korea’s regulatory gap persists, the more trading activity, settlement patterns, and market data accumulate offshore. Chainalysis estimates that stablecoin transaction volume denominated in won reached roughly $64 billion over the 12 months through June 2025, with most activity taking place via U.S. dollar stablecoins rather than KRW-linked tokens.

That matters because stablecoins are not merely a new payments format; they can become the default settlement layer for crypto trading, on-chain lending, and cross-border transfers. If Korean users continue transacting primarily through dollar-pegged stablecoins, Korea risks seeing its digital finance activity consolidated on ‘dollar rails,’ with reduced visibility and weaker domestic influence over how the won is represented in tokenized markets.

Critics argue the policy debate has been too narrow. Tiger Research recently said Korea’s discussions have largely revolved around three themes—issuer eligibility, supervisory authority, and risk warnings—while neglecting operational questions about how a won stablecoin should function in practice, including reserve composition, redemption mechanics, and interoperability with local financial market plumbing.

Some experts are urging a shift from perfect design to controlled deployment. Hwang Seok-jin, a professor at Dongguk University, was cited as saying that Korea is at a stage where issuance must begin even if details—such as capital requirements and ownership structure—are later refined through implementing rules. Others warn of structural constraints: Kim Jong-seung, CEO of XCrypton, pointed to challenges around reserve assets, noting that if U.S.-style ‘reciprocity’ standards are applied, reserves could effectively require short-term government securities—yet Korea lacks a deep market for ultra-short maturities comparable to U.S. three-month Treasury bills.

These issues are not academic. Korea is moving toward more open FX infrastructure, including allowing 24-hour won trading this summer and discussing easing rules on offshore trading. As the foreign exchange market becomes more accessible, the ‘digital rails’ that carry won liquidity may be built—first and fastest—by offshore players. Once liquidity and usage data concentrate on those rails, reversing the first-mover advantage becomes difficult even if domestic rules arrive later.

Lawmakers have begun to float intermediate steps. Ahn Do-geol, a member of the Democratic Party’s Digital Asset task force, was cited as calling for a regulatory sandbox to partially pilot a won stablecoin within the first half of the year. The argument is that waiting for a fully formed framework could be riskier than launching a tightly controlled test, particularly when demand is already being met elsewhere.

The market signal from KRWQ and MoonPay is that won stablecoin demand exists today—and will be satisfied with or without Korea’s domestic issuance regime. The remaining question for policymakers is whether Korea wants that demand—and the associated liquidity, data, and market structure—to develop primarily under its own oversight or largely offshore.