What Is KRW1? The First Korean Won–Backed Stablecoin

South Korea has entered the stablecoin market with the launch of KRW1, a digital asset pegged 1:1 with the Korean won. Announced in September 2025 by Busan Digital Asset Custody Services (BDACS), the token runs on the Avalanche blockchain and is fully backed by reserves kept at Woori Bank. Through real-time proof of reserves, each KRW1 on chain corresponds to an actual won held securely in a bank account, giving users clear assurance of its stability.

The release of KRW1 is more than a technical development. It is the first practical attempt to connect South Korea’s financial system with blockchain technology in a way that banks and regulators can monitor and support. Although the project remains in a pilot phase, it is already being considered for faster payments, lower-cost remittances, and potential government programs such as distributing relief funds. With new regulations for fiat-backed digital assets expected later in 2025, KRW1 has arrived at an important moment, serving as both a live experiment and a possible model for the Korean market.

What Is KRW1?

KRW1 is South Korea’s first stablecoin created by Busan Digital Asset Custody Services (BDACS), a regulated custodian established in 2022. The token is issued on the Avalanche blockchain and is designed as a digital representation of the Korean won. Rather than being a speculative asset, KRW1 is intended to function as a stable digital extension of national currency.

To build confidence, KRW1 is linked with Woori Bank’s systems through real-time application programming interfaces. This setup allows public verification of reserves at any moment, giving investors visible proof that the supply of KRW1 matches the actual won held in escrow. The design reflects an effort to balance blockchain innovation with the assurance of traditional finance.

The Technology Behind KRW1

KRW1 is built on the Avalanche blockchain, which was selected for its speed, security, and relatively low transaction costs. Avalanche is a proof-of-stake network that offers rapid finality, making it suitable for payments and transfers that need reliability. To ensure that KRW1 is more than a concept, BDACS has also introduced supporting infrastructure that makes the token practical for everyday use.

Key elements of the technology include:

• Avalanche platform: Provides a fast and scalable foundation where transactions confirm quickly and fees remain low.

• Proof of stake model: Adds security and energy efficiency compared with traditional proof of work systems.

• Mobile application: Developed by BDACS to let users send KRW1, check balances, and confirm reserves in real time.

• Bank integration: Real-time API links with Woori Bank allow visible proof of reserves, connecting blockchain records with fiat deposits.

Together, these features create a framework where KRW1 can function as a reliable digital version of the won, combining blockchain efficiency with banking trust.

Real World Uses for KRW1

KRW1 is intended to serve as a digital extension of the Korean won, making it easier to move and manage money in a fast and transparent way. Its design is focused less on speculation and more on everyday utility. Some of the main purposes being explored include:

• Payments and transfers: Individuals and businesses can use KRW1 for quick domestic transactions without relying on traditional bank clearing times.

• Cross border remittances: Workers abroad or families sending money to Korea could transfer value in KRW1 at a lower cost compared with conventional remittance services.

• Corporate operations: Companies can settle invoices or payroll using a blockchain-based won, benefiting from faster processing and on-chain audit trails.

• Government programs: Officials have suggested that KRW1 could be used to distribute emergency relief funds or subsidies more efficiently, reducing both delays and administrative costs.

These use cases illustrate how KRW1 aims to introduce the stability of the won into the digital environment, while enhancing speed and reducing fees.

How Is KRW1 Regulated Today?

KRW1 is currently in a pilot stage rather than a full market launch. Only a limited supply is circulating under the control of BDACS, and the focus is on testing how the token functions in practice. This cautious approach reflects the fact that South Korea has not yet finalized its rules for fiat-backed stablecoins, although regulators are actively working on them.

Key points to note about the pilot and regulatory environment:

• Limited rollout: KRW1 is available only in small quantities to demonstrate its design and verify its technical systems.

• Proof of concept success: The token was introduced after trials showed it could maintain a 1:1 peg and integrate effectively with bank reserves.

• Regulatory framework in progress: The Financial Services Commission is expected to release draft guidelines for stablecoins in late 2025, which will shape how KRW1 and similar tokens can operate.

• Competition emerging: Other Korean banks and institutions are preparing their own won-backed coins, suggesting that KRW1 may be the first of several domestic stablecoins.

This stage allows BDACS to refine the technology and align with upcoming regulations, while giving policymakers a working model to study as they finalize the country’s digital asset rules.

Conclusion

KRW1 marks an important step in South Korea’s exploration of digital money. As the first stablecoin backed by the won, it combines the security of traditional banking with the efficiency of blockchain. Issued by BDACS and supported by Woori Bank, the project offers a working model of how a national currency can move on-chain while remaining fully collateralized.

For now, KRW1 remains in a pilot phase, but its launch signals where the country may be heading. With regulations for fiat-backed digital assets expected soon, the token’s progress will be closely watched by investors, policymakers, and competing institutions. If KRW1 proves reliable and gains adoption, it could set the foundation for a new layer of Korea’s financial system. The question is whether KRW1 will remain a first mover or become the spark that pushes an entire digital won ecosystem into everyday use.

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