South Korea pauses central bank digital currency project
Concerns over costs and unclear commercial plans prompted the Bank of Korea to reconsider its CBDC project.
South Korea’s central bank has paused its second testing phase for a central bank digital currency (CBDC), initially scheduled for the fourth quarter of 2025. Banks in the pilot were told of the temporary halt due to high costs and a lack of a clear commercial plan.
Attention is now shifting towards the regulation and promotion of won-backed stablecoins. The government is fast-tracking legislation under the Digital Asset Basic Act, which would establish licensing, reserve management, and user protection standards for stablecoin issuers.
President Lee Jae-Myung has prioritised developing these digital tokens, aiming to bolster South Korea’s monetary sovereignty.
Domestic lawmakers argue that Korean crypto markets are overly dependent on US dollar-pegged stablecoins such as USDT and USDC, which could undermine local financial policy.
Eight central Korean banks, including KB Kookmin, Shinhan, and Woori, have launched a joint effort to issue a won-pegged stablecoin, showing strong commercial interest.
Officials caution that South Korea risks falling behind global competitors in stablecoin innovation without swift regulatory action. The market’s potential is seen as vast, possibly surpassing important sectors like AI and semiconductors.
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