South Korea’s Won-Pegged Stablecoin Initiative Could Reshape USDT Dominance in Forex Markets

South Korea’s central bank governor Rhee Chang-yong has cautiously endorsed the creation of a won-pegged stablecoin, acknowledging its potential to facilitate crypto trading while warning of possible disruptions to foreign exchange management. The proposal aligns with President Lee Jae-myung’s pro-crypto agenda, which recently saw the introduction of the Digital Asset Basic Act. This development comes as South Korea’s forex reserves have declined by $11 billion, highlighting the need for innovative solutions in the financial sector. The move could challenge the dominance of USDT in the region, offering a localized alternative for traders and investors.

South Korea Explores Won-Based Stablecoin Amid Forex Challenges

South Korea’s central bank governor Rhee Chang-yong has cautiously endorsed the creation of a won-pegged stablecoin, acknowledging its potential to facilitate crypto trading while warning of possible disruptions to foreign exchange management. The proposal aligns with President Lee Jae-myung’s pro-crypto agenda, which recently saw the introduction of the Digital Asset Basic Act.

Forex reserves have declined by $11 billion since December 2024, raising concerns about dollar stablecoin adoption exacerbating capital outflows. The new legislation WOULD allow qualified firms to issue stablecoins with proper reserves and regulatory approval from the Financial Services Commission.

Meanwhile, Korean exchanges face scrutiny as regulators push to reduce trading fees – a key campaign promise aimed at increasing retail participation. The global stablecoin market remains dominated by dollar-denominated options like Tether ($156B market cap) and USDC ($61B), though alternatives continue gaining traction.

U.S. Senate Advances GENIUS Act, Paving Way for Stablecoin Regulation

The U.S. Senate has taken a historic step toward cryptocurrency regulation with the passage of the GENIUS Act, marking the first crypto-specific bill to clear the chamber. The legislation, formally known as the Guiding and Establishing National Innovation for U.S. Stablecoins Act, establishes a surveillance framework for stablecoin issuance and operations.

Major stablecoin issuers including Tether (USDT), Circle's USDC, and Ripple's upcoming RLUSD stand to benefit from the regulatory clarity. The bipartisan bill passed with support from 18 Democrats, though its ethics provisions—which exclude the TRUMP family from stablecoin profit bans—remain contentious.

Proponents argue the GENIUS Act strikes a balance between consumer protection and innovation, potentially accelerating institutional adoption of dollar-pegged digital assets. The legislation's progress signals growing political recognition of stablecoins' systemic importance in the digital asset ecosystem.

Bank of America Explores Stablecoin Initiative Amid Regulatory Momentum

Bank of America is positioning itself at the forefront of institutional crypto adoption with plans to develop a dollar-backed stablecoin. The MOVE aligns with advancing U.S. legislation like the GENIUS Act, signaling growing mainstream acceptance of digital assets.

The banking giant joins JPMorgan, Wells Fargo, and Citigroup in leveraging existing payment infrastructure to create a Zelle-like network for fiat-backed stablecoins. This collaborative effort aims to modernize retail and cross-border payments through blockchain efficiency.

While regulatory uncertainty persists, BAC's strategic pivot reflects the financial sector's recognition of stablecoins as critical infrastructure for future payments. The initiative could significantly reduce settlement times compared to traditional systems like ACH.