The South Korean Central Bank has temporarily suspended the Digital Currency (CBDC) Project! Here is the reason.

The Central Bank of South Korea has temporarily halted the central bank digital currency (CBDC) project due to the rapid increase in the use of stablecoins in the country and the support it is receiving from the government.

South Korea Central Bank (BOK) has Halted the CBDC Project

The BOK informed the banks participating in the CBDC pilot program called "Hangang" about the postponement of the second phase tests.

This development coincided with a period when the first phase, launched in April 2025, is about to be completed, allowing 100,000 citizens to shop with digital currency at local vendors. The pilot program was conducted in collaboration with major local banks.

The Cost Burden and Uncertainties on Banks Were Factors

It was stated that each of the banks participating in the CBDC pilot program spent an average of 5 billion Korean won, approximately 3.7 million dollars, while the fact that the implementation was so costly without a clear rollout plan posed a significant burden for the banks.

It has been reported that the BOK will monitor legal regulations regarding stablecoins and that the issue of how CBDC, stablecoins, and bank deposit tokens can coexist has not yet been clarified.

Behind the shift from CBDC to stablecoin is the newly elected President Lee Jae Myung's statements supporting the issuance of stablecoins. Lee had made the legalization of the issuance of a stablecoin pegged to the Korean won and the development of the local stablecoin market a campaign promise.

In this context, Min Byeong-deok, the member of parliament responsible for digital assets in the election campaign, presented a draft law that will create a licensing regime and regulatory framework for stablecoin issuers.

The activity in the stablecoin market has also stirred major technology giants. Two major technology companies in South Korea, Kakao and Naver, have applied for registration of stablecoin brands through payment applications.

It was reported that the country's leading eight banks, including those participating in the CBDC pilot program, are preparing to establish a joint venture to issue a stablecoin indexed to the Korean won.

*This is not investment advice.

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