Cryptocurrency Gamble by South Korean Banks Grows as Regulatory Barriers Ease Up
South Korean major banks are aggressively positioning themselves in the stablecoin and cryptocurrency custody space ahead of expected regulatory approval by late 2025. With government support and new laws fostering this ecosystem shift away from direct Central Bank Digital Currency (CBDC) issuance towards private-sector stablecoin development, the banks are building teams for potential stablecoin issuance, digital asset custody, and digital exchange operations.
KakaoBank, South Korea’s largest digital and online bank, is planning to launch a Korean won-backed (KRW) stablecoin by 2025. Leveraging its prior CBDC pilot experience and crypto exchange collaborations, KakaoBank aims to build robust risk management for stablecoin issuance and custody. The bank expects this move to attract over 1 million new users in the first half of 2025.
Woori Bank serves as a clear example with a Digital Asset Team working under its New Business Alliance Platform Department. The team is pursuing crypto custody and stablecoin market entry through partnerships and consortiums. KB Kookmin Bank, on the other hand, formed a Digital Asset Response Council coordinating strategy across affiliated financial services, aiming for rapid policy adaptation and collaboration.
Shinhan Bank has a 20-member crypto task force working on custody, wallets, and token services. KEB Hana Bank and K Bank, a digital-only lender linked with Upbit exchange, have also established internal digital asset teams. Busan Bank, a regional lender, has a blockchain research team for exploring ledger uses in finance, although no detailed public updates have been made regarding its stablecoin and cryptocurrency initiatives.
The government's Financial Services Commission (FSC) is part of this shift, aiming to launch regulated spot crypto Exchange-Traded Funds (ETFs) and KRW stablecoins by late 2025. The FSC plan includes developing custody frameworks, pricing mechanisms, operational structures, and regulatory safeguards with strong investor protections. This is part of President Lee Jae-myung’s administration policy shift, which abandoned the Bank of Korea’s CBDC pilot in favor of private-sector-led digital finance solutions and frameworks for stablecoin issuance.
The Bank of Korea has established a new virtual asset division to help oversee crypto and stablecoin developments, signaling more active regulatory monitoring and strategic involvement in KRW stablecoin oversight and financial system modernization. South Korean banks are upgrading their legacy systems for on-chain settlements, preparing to be at the forefront of the cryptocurrency industry once regulations are established.
In summary, South Korean banks are taking no chances in the cryptocurrency market. Under the Moon Jae-in government in 2018 and 2019, Initial Coin Offerings (ICOs) were banned and rules were tightened in South Korea. However, under the new administration, regulated crypto innovation is being encouraged. The national assembly committees are considering bills that would allow banks to issue stablecoins, offer custody services, and run digital exchanges, with potential passage in the coming months. South Korean banks are lining up partners in preparation for potential regulatory changes, setting up rapid-response plans for any policy change, and teaming up with outside partners. The goal is to be ready to lead the way in the digital finance landscape once regulations are in place.
The Bank of Korea is actively monitoring cryptocurrency and stablecoin developments, as South Korean banks establish a robust presence in the digital finance landscape. KakaoBank, a leading digital bank, aims to issue a Korean won-backed stablecoin by 2025, leveraging its risk management expertise in both CBDC pilot experiences and crypto exchange collaborations. The government's financial services commission plans to launch regulated spot crypto Exchange-Traded Funds (ETFs) and KRW stablecoins by late 2025, marking a shift towards private-sector-led digital finance solutions.
