Bank of Korea Halts Second Phase of CBDC Pilot

South Korea local media reports that the Bank of Korea has put a temporary halt on its central bank digital currency initiative, giving way to some thing more important-the launch of the Korea's first own stablecoin.

This comes as the Korean won-pegged stablecoins gain rapid traction with the backing of the country’s new administration.

According to Yonhap News Agency, the Bank of Korea (BOK) recently informed participating banks that it will postpone the second phase of its Hangang CBDC project.

The decision comes less than three months after the launch of the high-profile pilot, which enabled 100,000 citizens to use the digital currency at local merchants in collaboration with major banking institutions.

7-Eleven, inc, a leading convenience store chain, was one of the participating businesses in the experiment.

According to the initial plan, customers would have been able to use the CBDC to make payments at 7-Eelven from April 1 to June 30. Participants were also entitled to a 10% discount for all their purchases.

The aim of this whole test was to evaluate the transaction speed, security, and customer response ahead of a potential full-scale roll-out.

It was revealed that the BOK’s decision is attributed to growing uncertainty about how CBDCs, stablecoins, and bank deposit tokens will coexist in the evolving regulatory landscape.

For now, BOK promises that it will continue to monitor the current regulations in the country before resuming the project.

“We will closely monitor legislative developments around stablecoins before moving forward.”

Shifting Priorities

Another major reason behind the temporary halting of the project was also due to the financial stress that the project was putting on the participating banks, with each bank investing an average of 5 billion Korean won without a clear path to full-scale implementation.

This, combined with the shifting regulatory focus, has led the BOK to reevaluate its digital currency strategy.

The shift in focus from CBDC to stablecoins comes as President Lee Jae Myung, who recently took office, has pledged to lift the ban on Korean won-based stablecoin issuance and foster the growth of a domestic stablecoin market.

The president’s goal is to prevent capital flight and enhance the competitiveness of South Korea’s financial sector.

Following the election, ruling party lawmaker Min Byeong-deok—who served as Lee’s digital asset policy chief—introduced legislation to establish a licensing regime and regulatory requirements for stablecoin issuers.

The eight major South Korean banks that have collaborated to launch the Won-pegged stablecoin include KB Kookmin, Shinhan, Woori, Nonghyup, Corporate Bank,Suhyup, Citi Korea, and SC First Bank.

Major Tech Firms and Banks Enter Stablecoin Market

Momentum for stablecoins has accelerated further with South Korea’s two largest IT companies, Kakao and Naver, filing trademark applications for stablecoins via their mobile payment platforms.

Local media reports that eight leading banks, including those involved in the CBDC pilot, are planning a joint venture to issue a Korean won-pegged stablecoin.

Bank of Korea Governor Lee Chang-yong has expressed support for the concept, stating that Korean won-based stablecoins could play a valuable role in the financial system if appropriate risk management measures are implemented.

South Korea’s stablecoin surge echoes developments in the United States, where the GENIUS Act is advancing to establish a legal framework for USD stablecoins under President Donald Trump’s administration.

As one of the world’s largest crypto trading markets, South Korea boasts a vibrant digital asset ecosystem, with government data showing that more than one in five Koreans owned or traded crypto by the end of 2024.

South Korea’s pivot from CBDCs to stablecoins signals a new chapter in the nation’s digital currency strategy—one that could shape the future of payments and financial innovation across Asia.