South Korea’s central bank has suspended preparations for the second phase of its central bank digital currency (CBDC) pilot, known as the Hangang Project. According to local media outlet Yonhap News, the move comes as regulators eye approving the development of won-pegged stablecoins.
A CBDC is a digital version of a country’s official fiat money, issued and backed directly by its central bank. Unlike cryptocurrencies like Bitcoin, CBDCs are legal tender with the same value as physical cash, but exist solely in electronic form. Countries like Nigeria and China have launched CBDCs to modernize their payment systems and maintain monetary sovereignty.
South Korea Halts CBDC Pilot Program
The Bank of Korea (BOK) informed participating banks during a virtual meeting that it will delay further testing until stablecoin legislation clarifies the future digital currency environment. The announcement comes after commercial banks raised objections over the project’s unclear roadmap and financial burden.
Collectively, commercial banks involved in the first pilot, from April to June, reportedly spent a total of nearly $26 million. They demanded that the BOK not only clarify targets and timelines but also bear a portion of future costs. In response, the government pledged to cover over half the expenses for the second test. Still, banks remain hesitant, citing uncertainty in regulations.
Further complicating the CBDC’s test is the push for won-pegged stablecoins, led by eight major banks targeting to launch in late 2025 or early 2026. Citing concerns over consumer protection and financial stability, Deputy Governor Ryoo Sang-dai emphasized that stablecoin issuance should begin with tightly regulated banks before expanding to non-bank actors.
As a result, the BOK is adopting the strategy of postponing the CBDC’s second phase to align with private stablecoin developments. The central bank now plans to begin discussions on resumptions during the first half of 2026, with participation limited to banks that voluntarily opt in.
South Korea Makes Crypto Moves
South Korea has recently taken bold steps to make its crypto market more inclusive, beyond the adoption of stablecoins. Recently, the Financial Services Commission (FSC) updated its regulations to allow non-profit organizations and exchanges to sell their crypto holdings.
Meanwhile, South Korea’s conservative People Power Party (PPP) has positioned crypto expansion as its central manifesto. It released a seven-point digital asset agenda, which included promises to abolish the “one exchange, one bank” rule and allow spot crypto ETFs.
