Circle’s newly launched blockchain platform, Arc, has drawn its first major international partnership as Busan Digital Asset Custody (BDACS) announces plans to issue a won-backed stablecoin dubbed KRW1 — marking South Korea’s entry into the next generation of global digital finance.
According to a report from Yonhap News Agency on Wednesday, BDACS signed a memorandum of understanding (MOU) with Circle to co-develop and deploy KRW1 on Arc. The collaboration aims to strengthen the bridge between South Korea’s domestic fintech ecosystem and the global stablecoin economy.
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“This partnership represents a meaningful step forward for Korea’s innovation to reach the global stage,” said Ryu Hong-yeol, CEO of BDACS. “By deploying KRW1 on Circle’s Arc, we are opening a gateway for Korean companies to participate in the global stablecoin network.”
BDACS had already registered the KRW1 trademark in December 2023, paving the way for its rollout. The firm emphasized that KRW1 will comply with Korean digital asset custody and financial regulations, while leveraging Circle’s technical infrastructure for liquidity, interoperability, and cross-border transactions.
Top stablecoins by market cap. Source: CoinMarketCap
Arc’s testnet attracts over 100 global institutions
The announcement comes just one day after Circle unveiled Arc’s public testnet, describing it as an “Economic Operating System for the internet” — a blockchain-based framework designed to connect global financial systems onchain.
Circle reported that more than 100 leading institutions, including BlackRock, Goldman Sachs, Visa, Mastercard, and State Street, have joined the testnet since launch. Arc supports predictable US dollar–based fees, sub-second finality, and optional privacy layers, making it suitable for both institutional and retail financial applications.
The platform also enables seamless use of USDC and other fiat-pegged assets, allowing for multi-currency interoperability across borders. Stablecoin issuers from Japan, Brazil, Mexico, and the Philippines are already testing their national tokens on Arc — and Korea’s KRW1 is now set to join this expanding roster.
Analysts say the move underscores Korea’s growing ambition to integrate its domestic fintech sector into the broader Web3 ecosystem while maintaining regulatory oversight.
Experts push back on Korea’s bank-led stablecoin model
The announcement coincides with a national debate over who should be permitted to issue digital won–backed stablecoins.
Sangmin Seo, chair of the Kaia DLT Foundation, criticized the Bank of Korea’s proposal to limit issuance to traditional banks, calling the plan “illogical.” The central bank argued that banks’ existing capital controls, foreign exchange compliance, and anti-money laundering (AML) frameworks would minimize risk.
Seo disagreed, suggesting that the focus should instead be on transparent, universal licensing standards that allow both banks and fintech firms to issue stablecoins under equal regulatory scrutiny.
“This technology thrives on open participation,” Seo said. “Restricting stablecoin issuance to banks alone could stifle innovation at a time when Korea should be leading in blockchain adoption.”
The launch of KRW1 on Circle’s Arc network, therefore, represents not only a technical milestone but also a symbolic challenge to Korea’s traditional financial establishment — positioning the country at a crossroads between innovation and regulation.