Won-less: Korea's Missing Stablecoin Law Sends Billions Abroad

The Korean won is the second most traded currency in the digital asset space, behind only the US dollar. According to a joint report by RedStone and Kaia, KRW pairs account for about 30% of global spot volume. However, this liquidity cannot be used as collateral in onchain lending or DeFi markets because there is no legally recognized won stablecoin.

The cost of this gap has been significant: net stablecoin outflows from Korea's five licensed exchanges have been negative for eighteen consecutive months, reaching a cumulative KRW 14.92 trillion, or approximately $10.4 billion.

This situation stems from two pieces of legislation moving at different speeds. The tokenized securities framework passed the National Assembly in January 2026 and will take effect in February 2027. In contrast, the Digital Asset Basic Act, which would license a won stablecoin, remains stalled in committee due to a dispute over whether KRW stablecoin issuance should be reserved for bank-led consortiums or opened to fintech issuers.

Korea's legislators have effectively legislated its capital markets layer before its payments layer. A securities registry will go live in February 2027, but without a licensed won settlement token to settle in, it is essentially unfinished infrastructure waiting on an unresolved political argument. Meanwhile, Korean capital continues to leave the country.

Regulatory clarity turns a won stablecoin from a payment instrument into DeFi collateral. Collateral feeds lending markets and tokenized asset settlement. This circuit mobilizes the stock of retail and corporate won deposits sitting inert today, a pool described as structurally large relative to any comparable new market entering the non-USD stablecoin space.