Circle’s Arc attracts South Korea’s first won-backed stablecoin experiment
News Summary
South Korean crypto custodian BDACS has announced plans to issue a won-backed stablecoin, “KRW1,” on Circle’s newly launched blockchain Arc. The company signed a memorandum of understanding (MOU) with Circle to develop and deploy KRW1, establishing an “organic cooperative framework.” The KRW1 trademark was registered in December 2023. This development follows the launch of Circle’s Arc public testnet. Circle describes Arc as an “Economic Operating System for the internet,” designed to integrate global financial infrastructure directly on-chain. The testnet has already garnered participation from over 100 global institutions, including BlackRock, Goldman Sachs, Visa, Mastercard, and State Street. Arc features predictable US dollar-based transaction fees, sub-second finality, and optional privacy settings, enabling seamless use of both USDC and other fiat-pegged assets. Stablecoin issuers from Japan, Brazil, Mexico, and the Philippines are already testing their national tokens on Arc, with Korea’s KRW1 now joining this list. However, Sangmin Seo, chair of the Kaia DLT Foundation, criticized the Bank of Korea’s (BOK) proposal for local banks to spearhead the rollout of won-backed stablecoins, calling it “illogical.” He advocated for clear rules for all potential issuers, both banking and non-banking, that meet certain regulatory standards, rather than restricting issuance to banks.
Background
Circle is one of the world's leading stablecoin issuers, with USDC being the second-largest stablecoin by market capitalization. Its newly launched Arc platform aims to be an “Economic Operating System” to move global financial infrastructure onto the blockchain, facilitating more efficient and low-cost cross-border transactions and asset tokenization. South Korea has been actively exploring regulatory frameworks for digital assets and stablecoins. The Bank of Korea (BOK) has previously discussed the possibility of a Central Bank Digital Currency (CBDC) and holds a cautious stance on private stablecoin issuance and regulation, preferring a model led by tightly regulated financial institutions to mitigate risks. Globally, central banks and private enterprises are exploring the potential of fiat-backed stablecoins as a means to enhance payment efficiency, reduce cross-border transaction costs, and foster financial innovation.
In-Depth AI Insights
1. Why is Circle's Arc platform attracting national fiat-backed stablecoins, and what are its strategic implications? - Arc's appeal lies in its provision of a mature, regulated, and institutionally-validated underlying infrastructure, lowering the barrier for nations exploring digital fiat. - For Circle, this signifies a transformation from a sole USDC issuer to a core technology provider and infrastructure operator for global fiat tokenization, significantly expanding its business moat and revenue streams. - This is more than just technical collaboration; it's Circle's strategic move to build a