KRWQ (Korean Won IQ) is a fully fiat backed stablecoin designed to maintain a 1:1 peg with the South Korean Won (KRW). It is issued and custodied by a regulated Korean bank on a full-reserve model, with reserves held 1:1 in segregated bank accounts. ^[6] It functions as a programmable, multi-chain digital currency intended for instant settlement and cross-border payments. ^[1] Launched on October 30, 2025 by IQ and Frax Finance, it is the first Korean won-pegged stablecoin on the Base network. ^{[2] [3] [5]}​

Overview

KRWQ is a stablecoin pegged to the South Korean Won, launched in October 2025 through a partnership between IQ and Frax Finance. ^{[2] [3] [5]} It operates as a digital version of the currency at "internet speed" and was the first Korean won-pegged stablecoin to launch on Coinbase's Ethereum Layer 2 Base network. ^{[2] [4]}​

The project was created to address inefficiencies in Korea's financial infrastructure, including a high reliance on USD for cross-border trade, operational delays constrained by domestic banking hours, and the lack of a regulator-friendly, won-denominated stablecoin for on-chain institutional use. ^[6] Navin Vethanayagam, co-founder of IQ, stated, "KRWQ fills a critical gap in the market. While USD-backed stablecoins dominate today, no credible won-denominated stablecoin has ever launched at scale."

KRWQ is explicitly not a Central Bank Digital Currency (CBDC), but a private-sector solution issued by a regulated Korean bank. The project's primary objective is to offer a transparent and efficient digital representation of the KRW that facilitates 24/7, low-cost transactions across multiple blockchain networks. The stablecoin is designed to be fully backed by KRW reserves held 1:1 in segregated bank accounts, with the project claiming to maintain over-collateralization to ensure the stability of its peg. ^{[1] [6]}​

Ecosystem Participants

The KRWQ ecosystem is structured around three core roles to ensure regulatory compliance and operational integrity. ^[6]

• Issuer Bank: A regulated Korean bank that serves as the legal issuer of KRWQ. It holds the fiat reserves in segregated accounts, executes the minting and redemption of tokens, and maintains KYC records for its direct partners.
• KRWQ Operator: The technology and liquidity provider responsible for managing the smart contracts, oracle integrations for Proof-of-Reserves, deny/allow-list management, and the publication of reserve attestations.
• Distribution Partners: Licensed entities such as remittance providers, Payment Service Providers (PSPs), OTC desks, and Virtual Asset Service Providers (VASPs) that distribute KRWQ to end-users.

Technology

Core Mechanism

KRWQ operates as a fiat-collateralized stablecoin. The Issuer Bank mints KRWQ tokens upon receiving KRW deposits from a whitelisted partner and burns tokens upon redemption, ensuring that each token is backed 1:1 by fiat currency held in a segregated reserve account. This model is intended to ensure that the value of each token is directly supported by an equivalent amount of fiat currency. The project further claims to maintain a state of over-collateralization, meaning the value of the reserves exceeds the total value of the circulating KRWQ tokens, providing an additional buffer against potential price fluctuations or liquidity issues. ^{[1] [6]}

Smart Contract Controls

The KRWQ smart contracts include several administrative and security features to align with regulatory requirements and mitigate risks. ^[6]

• Deny/Allow-lists: On-chain lists are used to control which addresses can hold or transact KRWQ, enabling compliance with sanctions and other restrictions.
• Pause/Block Functions: Administrative controls allow for the halting of token activity under strict governance protocols in response to emergencies or security incidents.
• Travel Rule Hooks: Native functions are built in to emit and ingest metadata required for Financial Action Task Force (FATF) Travel Rule compliance between VASPs.
• Circuit Breakers: Pre-configured limits, such as per-address daily caps and corridor-specific throttles, are in place to mitigate the impact of potential security breaches.

Multi-chain Architecture

To enhance accessibility, reduce transaction costs, and improve scalability, the project has adopted a multi-chain strategy, utilizing LayerZero's Omnichain Fungible Token (OFT) standard and the Stargate bridge to allow for transfers across different blockchains. ^{[2] [4] [5]} By deploying on multiple blockchains, KRWQ allows users to transact on the network that best suits their needs regarding speed, cost, and security. ^[1]

The stablecoin is currently live on the following networks:

• Ethereum (Layer 1): 0xc00db6b41473d065027f5ed6fada20fde75f142e
• Base (Layer 2): 0x370923D39f139C64813f173a1bf0b4f9Ba36a24f

The project has also announced plans to expand its presence to other Layer 2 scaling solutions to further improve transaction efficiency. Planned future deployments include:

• Giwa
• Optimism
• Scroll
• Linea

This expansion onto Layer 2 networks is aimed at leveraging their lower gas fees and faster confirmation times compared to the Ethereum mainnet. ^[1]

Developer Ecosystem

KRWQ intends to provide a suite of resources to encourage development and integration within its ecosystem. The project plans to offer Application Programming Interfaces (APIs), comprehensive Software Development Kits (SDKs), and detailed technical documentation to assist developers in building applications that utilize the stablecoin. ^[1]

Tokenomics

Supply and Backing

As of late 2025, the total supply of KRWQ was reported to be 144.51 million tokens. The stablecoin's value is backed by reserves of South Korean Won held as sight deposits in a regulated Korean bank. The project's treasury policy strictly prohibits the rehypothecation or leveraging of reserve assets. The official website reported a reserve ratio of 102.4%, indicating that its fiat holdings exceeded the value of the circulating supply. This claim of over 100% asset backing is a core component of its strategy to maintain user trust and the stability of the 1:1 peg with the KRW. ^{[1] [6]}

Reserve Transparency

KRWQ has implemented a multi-layered Proof-of-Reserves (PoR) framework to promote transparency. ^[6]

• Daily: An on-chain supply snapshot is published alongside an oracle-fed hash of the reserve balance.
• Monthly: An independent, licensed auditor provides a formal attestation report verifying the reserve holdings.
• Quarterly: A full reconciliation report is published, detailing supply versus reserves, transaction volumes by corridor, and any operational incidents.

The project also provides a public Etherscan address for its primary reserve holdings: 0x5573b8db2403bee020c36ee0df32694dffef04c. ^[1]

Minting and Redemption

Access to minting and redeeming KRWQ is managed through a tiered model based on compliance and partner type. ^[6]

• Tier A (Direct Partners): Entities like banks, remittance providers, and licensed VASPs undergo full KYC/AML and have direct access to mint and redeem KRWQ with the Issuer Bank. For minting, a partner wires KRW to the reserve account, and the Issuer Bank mints an equivalent amount of KRWQ to the partner's address. For redemption, the partner's KRWQ is burned, and the equivalent KRW is paid out.
• Tier B (Institutions): Institutional clients and OTC desks access mint/redeem functions through a licensed Tier A partner after undergoing enhanced due diligence.
• Tier C (Retail): End-users access KRWQ through licensed distribution partners (e.g., on an exchange or via a remittance app). They are subject to strict transaction caps, and the partner is responsible for their KYC. Retail users do not have direct minting or redemption rights with the issuer.

In addition to the primary market, KRWQ is available for trading on decentralized exchanges like Aerodrome Finance, where a KRWQ-USDC pair provides secondary market liquidity. ^{[2] [5]}

Use Cases

KRWQ is designed for several primary applications that leverage its 24/7 availability and programmability. ^[6]

• Outbound Remittances: Facilitating instant, low-cost cross-border payments, initially targeting corridors from Korea to Southeast Asia, China, and Japan.
• Cross-Border B2B Settlement: Allowing Korean merchants to pay international suppliers in markets like China and Japan with T+0 settlement, reducing FX spreads and operational delays.
• Institutional On-Chain FX & Hedging: Providing 24/7 on-chain KRW liquidity for market makers and funds to hedge exposure without being constrained by traditional banking hours.
• Tourist Wallets (Pilot): A planned closed-loop system for tourists to top up a digital wallet with KRWQ for spending, with features like automatic VAT refunds.
• Fan Economy & Ticketing (Pilot): A planned system for global fan communities to use KRWQ for payments, enabling programmable royalties and anti-scalping ticketing through KYC-gated NFT access.

Compliance and Governance

Regulatory Approach

KRWQ is designed to be the first fully regulatory compliant stablecoin in Korea, developed in anticipation of the forthcoming stablecoin legislation currently under review in the Korean National Assembly. ^{[2] [5]} The initiative builds on the shared commitment of IQ and Frax to advancing transparent, secure, and responsibly governed stablecoin infrastructure worldwide, with IQ bringing Frax's expertise in regulatory compliance to the design of KRWQ. ^[2]

At this time, KRWQ is intended for use in global DeFi markets and is not being marketed or offered to Korean residents, as local regulations on stablecoins are still under development. ^{[2] [5]}

Tiered Onboarding Model

Access to KRWQ is governed by a tiered onboarding system to ensure compliance with KYC and AML regulations. ^[6]

• Tier A (Direct Partners): Banks, remitters, PSPs, and VASPs undergo full KYC/AML and have unlimited limits with direct mint/redeem access.
• Tier B (Institutions): Institutional clients and OTC desks undergo enhanced due diligence and access mint/redeem functions through a licensed VASP or bank partner.
• Tier C (Retail): End-users access KRWQ through licensed partners. They are subject to strict transaction caps, and the partner is responsible for KYC.

Anti-Money Laundering (AML) and Know Your Customer (KYC)

The project has implemented a compliance framework designed to prevent illicit financial activities. This includes a risk-based, tiered Know Your Customer (KYC) system for both individual and institutional users, requiring different levels of verification based on transaction volumes and other risk factors. The framework also involves continuous screening of users against international sanctions lists and databases of Politically Exposed Persons (PEPs). To monitor for suspicious behavior, the system employs transaction risk scoring to automatically identify and escalate anomalous activity for further review. ^[1]

Travel Rule Compliance

KRWQ is designed to be "Travel Rule native" and to adhere to the Financial Action Task Force (FATF) Travel Rule. This rule requires financial institutions and VASPs to collect and transfer originator and beneficiary information for virtual asset transactions above a certain threshold. The KRWQ system integrates with specialized third-party service providers that manage the secure exchange of this data, and transfers from non-compliant VASPs are designed to be refused by default. ^{[1] [6]}

Governance Structure

The project is overseen by an Issuer Council, a governing body composed of the Issuer Bank, the KRWQ Operator's risk and compliance teams, and an independent observer. The council meets monthly to review controls, attestations, and overall system health. Its Treasury Policy mandates that all reserves be held as sight deposits in the Issuer Bank, with a strict prohibition on rehypothecation and leverage. ^[6]

Risk Management

The project has outlined a multi-faceted risk management framework to ensure operational stability and protect user assets. This framework addresses several key areas: ^[1]

• Foreign Exchange (FX) Risk: To manage the risk of volatility between the KRW and other currencies in its reserve holdings, the project employs foreign exchange hedge limits and stress triggers.
• Counterparty Risk: The framework establishes custodial concentration thresholds to mitigate risks associated with holding large portions of its reserves with a single third-party custodian.
• Operational Risk: In the event of technical or operational issues, the project has committed to a policy of public incident reporting, which includes providing timely status updates and detailed post-mortems to maintain transparency with its users.

Key Distinctions

KRWQ is positioned as a distinct solution compared to other financial instruments. ^[6]

• vs. USD Stablecoins: It allows for pricing, settlement, and hedging in Korea's native currency, reducing the foreign exchange risk and costs associated with using an intermediary currency like the USD.
• vs. Bank Wires: It offers 24/7/365 settlement and programmability (e.g., for automated escrow or payroll), overcoming the limitations of traditional banking hours and providing lower operational overhead.
• vs. CBDC: It is a private-sector solution that can operate under existing financial laws and licensing frameworks, offering a market-ready alternative while central bank digital currency development timelines remain uncertain.

Roadmap

The project's roadmap for its first 12 months of operation is divided into three phases. ^[6]

• Phase 0 (Months 0–3): In this initial phase, the project finalized its agreement with the Issuer Bank, integrated Travel Rule networks, launched an SDK for partners, seeded initial liquidity pools (KRWQ/USDC), and published its first attestation report.
• Phase 1 (Months 3–9): This phase focuses on launching live operations on two remittance corridors and one B2B settlement pilot. Plans include expanding the OTC and market-making network, adding a KRWQ/JPY liquidity pair, publishing the first quarterly reconciliation report, and undergoing an external security review.
• Phase 2 (Months 9–12): In the latter part of the first year, the project may add a second issuance chain, expand closed-loop retail pilots (e.g., tourist/duty-free), and prepare compliance and liquidity dossiers for potential listings on centralized exchanges.