South Korea's KRW Stablecoin Race: Avalanche and Solana Lead as Banks Build Digital Won Infrastructure

South Korea's landmark Digital Basic Act has sparked a competitive race to launch won-pegged stablecoins, with Avalanche securing first-mover advantage through KRW1 while Solana positions itself as the preferred blockchain infrastructure for major financial institutions entering the digital currency space.

Digital Basic Act Opens Gateway for KRW Stablecoins

South Korea's passage of the Digital Basic Act earlier in 2025 created the regulatory foundation for won-pegged stablecoins, triggering a wave of innovation from banks, fintech companies, and blockchain platforms eager to capture market share in Asia's fourth-largest economy. The legislation establishes clear guidelines for digital asset issuance while maintaining consumer protection standards.

Ethereum Notably Absent from Initial Deployments

In a significant development for blockchain competition, the first wave of South Korean stablecoins bypasses Ethereum entirely. Instead, early projects leverage alternative networks like Avalanche and Solana, suggesting these platforms have successfully positioned themselves as more attractive options for institutional deployment in the Korean market.

KRW1: First Mover on Avalanche Network

In September 2025, digital asset custody specialist BDACS unveiled a proof-of-concept for KRW1, positioning the token to become the first won-pegged stablecoin reaching market since the Digital Basic Act's passage. The project represents a collaboration between blockchain technology and traditional banking infrastructure.

Deposit Token Model vs Traditional Stablecoin

While marketed as a stablecoin, KRW1 technically functions as a deposit token under its current structure. Unlike bank-issued tokenized deposits such as JPMorgan's JPM Coin, KRW1 maintains full backing through cash reserves rather than government bonds, with fiat held in segregated accounts at Woori Bank providing 1:1 redemption guarantees.

KRW1 was initially launched on Avalanche, which BDACS selected for its technological excellence, with plans to eventually expand to other blockchain networks.

BDACS handles token issuance and administration while Woori Bank, one of South Korea's leading financial institutions, manages the reserve custody. This hybrid model combines blockchain technology's efficiency with traditional banking's regulatory compliance and consumer trust.

Avalanche and Solana compete to become the blockchain infrastructure powering South Korea's digital won ecosystem

Solana Foundation's Strategic Partnership

On October 14, 2025, crypto startup Wavebridge announced a strategic Memorandum of Understanding with the Solana Foundation, marking Solana's formal entry into South Korea's emerging stablecoin infrastructure race. The partnership targets financial institutions seeking blockchain solutions for digital currency deployment.

Infrastructure Focus for Institutional Adoption

The Solana-Wavebridge collaboration aims to develop comprehensive KRW stablecoin infrastructure specifically designed for Korean banks and asset managers. Beyond simple stablecoin issuance, the partnership will enable deployment of tokenized investment products and other on-chain financial services.

Competing Against Avalanche's First-Mover Advantage

While BDACS and Avalanche secured first-mover status with KRW1's proof-of-concept, Solana's institutional-focused strategy could prove more sustainable long-term. By offering comprehensive infrastructure and deployment tools rather than supporting individual projects, Solana positions itself as the preferred choice for large-scale institutional adoption.

Nine-Bank Coalition Emerges as Major Competitor

Despite KRW1's early progress, the token faces formidable competition from a coalition of nine major South Korean banks exploring collaborative stablecoin development. This institutional alliance commands significantly greater financial resources, regulatory influence, and market reach than independent projects.

Behind-Closed-Doors Development

Following the Digital Basic Act's passage, major banks and payment companies filed numerous trademark applications suggesting ambitious plans for the stablecoin space. However, if these institutions are actively developing products, they're doing so privately without public announcements or proof-of-concept demonstrations.

After lawmakers passed the Digital Basic Act, major banks and payment companies filed a string of trademark applications that suggest many have ambitions in the space.

This stealth approach suggests established financial institutions are taking measured, compliance-focused approaches to product development, potentially waiting for complete regulatory clarity before public launches. Their eventual market entry could reshape the competitive landscape dramatically.

Blockchain Selection Becomes Critical Decision

As South Korean financial institutions evaluate stablecoin strategies, blockchain infrastructure selection emerges as a crucial decision impacting scalability, interoperability, compliance capabilities, and long-term competitiveness. The choice between Avalanche, Solana, or potentially other networks will influence ecosystem development for years.

Avalanche's Technological Excellence Pitch

BDACS cited Avalanche's "technological excellence" as the deciding factor for KRW1 deployment. Avalanche's subnet architecture allows customized blockchain networks with specific compliance rules, potentially appealing to institutions requiring regulatory flexibility while maintaining security and decentralization.

Solana's Scale and Speed Advantages

Solana counters with proven capacity for high-throughput transactions at minimal cost, processing thousands of transactions per second with sub-second finality. For stablecoins requiring frequent small-value transfers, Solana's performance characteristics and low fees present compelling economic advantages over alternative networks.

Ethereum's Notable Absence

The exclusion of Ethereum from early South Korean stablecoin projects represents a significant development in blockchain competition. Despite Ethereum's dominance in decentralized finance and stablecoin issuance globally, Korean institutions have opted for alternative networks for their won-pegged tokens.

Cost and Scalability Concerns

Ethereum's historically higher transaction costs and lower throughput compared to newer blockchain networks may have influenced institutional decision-making. For stablecoins requiring frequent small-value transfers, network fees and processing speeds directly impact user experience and economic viability.

Layer 2 Solutions Lag in Market Penetration

While Ethereum's Layer 2 scaling solutions address many performance limitations, these technologies have yet to achieve the mainstream adoption and institutional familiarity that base-layer alternatives like Solana and Avalanche offer. Korean institutions may prefer the simplicity of single-layer architectures for initial deployments.

Regulatory Framework Still Evolving

Despite the Digital Basic Act providing foundational authorization for KRW stablecoins, South Korean regulators continue developing detailed implementation frameworks addressing consumer protection, reserve requirements, redemption mechanisms, and anti-money laundering compliance. This ongoing regulatory refinement creates uncertainty for early movers.

Exploratory Phase Continues

Current KRW stablecoin initiatives remain largely exploratory as financial institutions and blockchain platforms test technical capabilities while awaiting complete regulatory clarity. Once comprehensive frameworks are established, market participants expect rapid innovation and product launches across the sector.

For now, KRW stablecoins remain exploratory. While the Digital Basic Act set the stage for legalization, the government is still ironing out the finer details of regulation.

Compliance-First Approach Dominates

South Korean financial institutions demonstrate cautious, compliance-focused approaches to stablecoin development, contrasting with more aggressive strategies seen in other jurisdictions. This conservative stance reflects Korea's regulatory culture and institutions' desire to avoid penalties or reputational damage from premature launches.

Implications for Global Stablecoin Competition

South Korea's stablecoin race carries implications beyond the Korean market, potentially influencing how other Asian nations approach digital currency frameworks and which blockchain networks gain institutional legitimacy for financial applications.

Asian Market Blueprint

If Avalanche and Solana successfully capture South Korean institutional adoption, their proven track records could influence blockchain selection decisions in other Asian markets developing similar stablecoin frameworks. Success in Korea might unlock opportunities across Southeast Asia and beyond.

Ethereum's Need to Respond

Ethereum's absence from early Korean stablecoin projects highlights competitive challenges the network faces from newer, faster alternatives. The Ethereum Foundation and ecosystem participants may need more aggressive institutional outreach and Layer 2 education to compete effectively for enterprise blockchain adoption.

What's Next for Korean Stablecoin Development

As regulatory frameworks solidify and initial proof-of-concepts mature toward production launches, South Korea's stablecoin ecosystem will likely experience rapid expansion. Multiple developments could reshape the competitive landscape in coming months.

Bank Coalition Launch Timeline

The nine-bank stablecoin coalition's eventual product launch represents the most significant pending development. When this institutional alliance unveils its solution and blockchain selection, it will likely trigger ecosystem consolidation as smaller players align with or compete against the dominant standard.

Multi-Chain Strategy Emergence

KRW1's stated intention to expand beyond Avalanche suggests multi-chain deployment may become standard practice. Stablecoin issuers might leverage multiple blockchains simultaneously, routing transactions across networks based on cost, speed, and specific use case requirements.

Central Bank Digital Currency Interaction

As private stablecoins proliferate, questions arise about interaction with potential central bank digital currency initiatives. The Bank of Korea has explored CBDC concepts, and clarifying relationships between private stablecoins and official digital currency will influence market development.

Once a proper framework is in place, however, the South Korean market is primed for a rush of innovation.

Investment and Adoption Implications

For cryptocurrency investors and blockchain ecosystem participants, South Korea's stablecoin developments create multiple opportunities and considerations. Network tokens, related infrastructure projects, and Korean-focused blockchain initiatives stand to benefit from successful stablecoin adoption.

AVAX and SOL Price Catalysts

Avalanche and Solana's positions in the Korean stablecoin race could serve as positive catalysts for their native tokens. Successful institutional adoption would validate these networks' enterprise viability and potentially drive increased transaction volumes, network usage, and token demand.

Ecosystem Development Opportunities

Stablecoin infrastructure deployment creates opportunities for related services including wallet providers, payment processors, decentralized exchanges, and financial applications built on KRW stablecoin rails. Developers and entrepreneurs focused on Korean market integration could capture early-mover advantages.

Conclusion: Early Lead in Competitive Race

Avalanche and Solana have secured early positioning in South Korea's emerging KRW stablecoin ecosystem through distinct strategies—Avalanche via KRW1's first-mover proof-of-concept and Solana through comprehensive institutional infrastructure partnerships. However, the race remains wide open as major bank coalitions develop competing solutions behind closed doors.

The ultimate winners will likely be determined not purely by technical capabilities but by regulatory relationship building, ecosystem development, and sustained institutional support. As South Korea's regulatory framework solidifies and moves from exploratory to production phases, the market is poised for rapid innovation that could reshape Asian stablecoin adoption patterns.

For blockchain networks, successfully capturing Korean institutional adoption could provide blueprints for expansion across other Asian markets developing similar digital currency frameworks. The KRW stablecoin race thus represents more than a local competition—it's a proving ground for which blockchain infrastructures can successfully serve institutional financial services at scale.