Daniel Walker
South Korea’s central bank, the Bank of Korea (BOK), has opted to temporarily suspend its central bank digital currency (CBDC) project, as momentum grows behind won-pegged stablecoins backed by political leadership.
According to Yonhap News Agency, the BOK recently informed participating financial institutions in the Hangang CBDC pilot that plans for the program’s second phase will be postponed. This shift comes just three months after launching the retail-focused pilot, which allowed 100,000 citizens to transact with CBDCs at partnered merchants across the country.
Legislation Uncertainty Drives Pause
The decision stems from growing uncertainty about how CBDCs, stablecoins, and bank-issued deposit tokens will coexist under emerging regulatory frameworks. Yonhap cited a banking executive who said the BOK would observe the direction of upcoming stablecoin legislation before advancing further with its digital currency trials.
Participating banks reportedly bore significant financial burdens, each spending around ₩5 billion KRW (approximately $3.7 million) to support the pilot — despite no clear roadmap for actual implementation.
Government Support Shifts to Stablecoins
The pivot follows the election of President Lee Jae Myung, who has vowed to lift the ban on won-based stablecoins and foster a regulated domestic stablecoin industry as a means to prevent capital outflows and modernize South Korea’s financial infrastructure.
In line with that vision, lawmaker Min Byeong-deok, who led Lee’s digital asset policy during the campaign, has proposed new legislation to create a licensing framework for stablecoin issuers and define minimum compliance standards.
Tech Giants and Banks Enter the Stablecoin Race
The nation’s top tech conglomerates — Kakao and Naver — have already submitted trademark filings for stablecoin-related products through their mobile payment platforms. Meanwhile, eight major Korean banks, including those involved in the CBDC pilot, are reportedly planning to launch a joint stablecoin venture tied to the Korean won.
Even the BOK appears increasingly favorable toward stablecoins. Central bank Governor Lee Chang-yong recently acknowledged the potential of such assets, stating that they could be viable with appropriate risk management measures in place.
Echoes of U.S. Trends and Growing Retail Adoption
South Korea’s shift mirrors developments in the United States, where the GENIUS Act — a bipartisan effort to establish legal clarity for USD-backed stablecoins — continues to advance with support from President Donald Trump.
South Korea remains one of the world’s most active crypto markets, with government data indicating that over 20% of the population actively trades digital assets as of late 2024.
