South Korea’s ambitious plans for a central bank digital currency (CBDC) have hit a pause as the government shifts focus to won-backed stablecoins. The Bank of Korea has suspended its ongoing digital currency pilot, citing uncertainty over how the CBDC initiative aligns with newly proposed stablecoin regulations.
CBDC Trials Halted as Banks Shift Focus
According to local reports from Yonhap and Chosun Daily, the Bank of Korea has postponed the second phase of its digital currency tests, originally scheduled for later this year. The first round, which ran from April 1 to June 30, involved 100,000 participants testing retail payments using a prototype CBDC. The next stage was expected to expand merchant participation and test remittance functionality.
“The second round of CBDC testing is on the verge of collapse,” admitted a senior official from one of the seven participating banks.
Many of these banks are reportedly dissatisfied with the high costs of participation and frustrated by the lack of a commercialization roadmap from the central bank.
New Leadership Pushes Stablecoin Strategy
The decision comes in the wake of President Lee Jae-myung’s election, whose campaign strongly supported crypto adoption. Lee’s administration recently proposed a bill allowing stablecoin issuance, provided companies have minimum equity capital of 500 million Korean won (~$370,000 USD).
President Lee’s pro-crypto stance is now reshaping South Korea’s digital currency priorities.
Several major banks — including KB Kookmin, Shinhan, Woori, and NongHyup — are now pursuing their own won-pegged stablecoin project, scheduled to launch in 2026. These banks also participated in the initial CBDC trials, signaling a clear pivot toward commercially viable crypto products.
Market Reaction and Industry Implications
The news has sparked mixed reactions in South Korean financial markets. Shares of fintech firms like KakaoPay fell over 7%, while traditional banking stocks such as KB Financial and Shinhan Financial Group rose modestly, reflecting confidence in the stablecoin opportunity.
Stablecoins offer banks a faster, more profitable path to digital asset innovation than central bank-led models.
Stablecoins Gain, CBDC in Limbo
South Korea’s suspension of CBDC trials signals a strategic shift toward decentralized finance infrastructure led by the private sector. With banks favoring stablecoin development over costly central initiatives, the country may become a testing ground for public-private competition in digital currency innovation.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.