Crypto protocol Frax and AI agent platform IQ have partnered to launch a Korean won stablecoin on the Coinbase-linked Base blockchain.
In a statement viewed by Cointelegraph on Thursday, the two companies launched KRWQ, the first fully-backed won stablecoin on Base, alongside a trading pair with the US dollar stablecoin USDC (USDC) on the Aerodrome exchange.
The pair also claims KRWQ is the first multichain won-denominated stablecoin, as the token can be transferred across multiple networks using services from crosschain protocols LayerZero and Stargate Finance.
South Korea's Stablecoin Ambitions and Regulatory Landscape
South Korea has been ramping up its ambitions for local currency stablecoins, with plans for a regulatory framework for the tokens and the central bank pushing for the banking sector to lead their rollout.
The Bank of Korea’s push for banks to lead a stablecoin rollout has seen pushback from the crypto sector. Kaia DLT Foundation chair Dr. Sangmin Seo recently told Cointelegraph that the central bank should establish clear rules for stablecoin issuers that can “minimize monetary risks and foster innovation.”
Addressing Market Gaps and Compliance
“KRWQ fills a critical gap in the market. While USD-backed stablecoins dominate today, no credible won-denominated stablecoin has ever launched at scale,” said IQ co-founder Navin Vethanayagam.
Frax and IQ said that KRWQ was designed to be fully regulatory-compliant in South Korea, and was “developed in anticipation of the forthcoming stablecoin legislation” to be reviewed in the country’s national legislature.
However, the duo said that the stablecoin is not being marketed or offered to South Korean residents and is “intended for use in global DeFi markets,” as lawmakers are still discussing rules around the tokens.
Minting and redemption of the token is also limited to “eligible KYC’d counterparties,” including exchanges, market makers, and integrated institutional partners.
Recent Developments in Won-Backed Stablecoins
KRWQ’s launch comes a day after South Korean crypto custodian BDACS said it plans to issue its own won-backed stablecoin called KRW1 on Circle internet Group’s new blockchain, Arc.
BDACS’ stablecoin first went live on the Avalanche blockchain last month following a proof-of-concept with Woori Bank.