South Korea Pauses CBDC Project, Focuses on Won-Backed Stablecoins
South Korea has put its central bank digital currency (CBDC) project on hold. The Bank of Korea has suspended the second phase of its CBDC pilot, originally set for late 2025. This decision comes as regulators shift focus to fast-tracking won-backed stablecoins.
According to a bloomberg report, discussions on the CBDC pilot, known as “Project Han River,” have been paused. The project, which began earlier this year, aimed to test features like peer-to-peer transfers and merchant payments. Though, banks raised concerns about high costs and unclear commercialization plans. Now, the central bank will monitor progress on a legislative proposal for regulating private stablecoin issuers.
The move aligns with President Lee Jae-myung’s agenda to accelerate stablecoin development.The proposed Digital asset Basic Act outlines licensing requirements for issuers and includes provisions for reserve management and user protection. The shift is part of a broader strategy to preserve monetary sovereignty and reduce reliance on foreign stablecoins like USDT and USDC. These assets accounted for over ₩57 trillion in trading volume in Q1 2025.The new focus is on a licensing regime that allows companies with as little as ₩500 million in equity capital to issue stablecoins. Democratic Party leaders argue that local crypto markets are too reliant on U.S.dollar-pegged assets. Without swift action, Korea may lag in the stablecoin race, warns Min Byeong-deok, head of the Digital Asset Committee.
Eight major banks, including KB Kookmin and Shinhan, have launched a joint initiative to issue a KRW-pegged stablecoin. The move is crucial to support the country’s financial policy. Commercial banks are responding positively to this policy shift.
- CBDC project paused due to cost and commercialization issues.
- Regulators aim to establish a regulatory framework for Korean won-based stablecoins.
- Eight banks have launched a joint initiative to issue a KRW-pegged stablecoin.
Min Byeong-deok, head of the Digital Asset Committee, believes the stablecoin market could surpass AI or semiconductors. The proposed legislation supports compliant entities in issuing stablecoins.
President Lee Jae-myung prioritizes the institutionalization of KRW-backed digital tokens. The initiative supports companies with as little as ₩500 million in equity capital to issue stablecoins.
Min Byeong-deok warns that without swift action, Korea may lag in stablecoin leadership.
