South Korean Exchange Upbit to Work on Won Stablecoin With Naver Pay: Report
Upbit, a major South Korean cryptocurrency exchange, and Naver Pay, a prominent payments company, are collaborating to develop a KRW (South Korean Won) stablecoin initiative. This venture, revealed by an unnamed official from Dunamu, Upbit’s parent company, aims to establish a payment system utilizing this stablecoin. While specifics remain limited, the official indicated that a formal announcement regarding the scope and operational details of the partnership will follow the completion of the necessary system development.
The initiative aligns with the supportive stance of South Korea’s newly elected president, who expressed his endorsement of a “won-based stablecoin market.” This declaration, made earlier in June, notably influenced the Bank of Korea’s decision to suspend its plans for a central bank digital currency (CBDC). The introduction of a KRW stablecoin holds significant implications for the local cryptocurrency market.
South Korean cryptocurrency traders currently face challenges related to transferring KRW into and out of the country, leading to substantial price discrepancies and arbitrage opportunities. This price difference, often referred to as the “kimchi premium,” represents a significant spread between South Korean and U.S. exchange prices. This spread, historically lucrative for arbitrage traders, notably contributed to Sam Bankman-Fried’s early financial success.
A successfully implemented, on-chain tradable KRW stablecoin would offer a solution to these restrictions. Traders could directly exchange the KRW stablecoin for other established stablecoins like USDT or USDC, thereby circumventing the existing fiat limitations and significantly reducing, or potentially eliminating, the price discrepancies between domestic and international exchanges. This would foster greater market efficiency and integration into the global cryptocurrency ecosystem. The impact on trading volume and liquidity within the South Korean market could be substantial. The success of this initiative will depend on regulatory approvals and the technical implementation of a robust and secure stablecoin system.
