South Korea’s central financial institution digital forex challenge has been placed on maintain because the regulators flip their consideration to fast-tracking the issuance of won-backed stablecoins.
Based on a Bloomberg report citing an unnamed Financial institution of Korea official, the central financial institution has suspended plans for the second part of its CBDC pilot, which had been scheduled for the fourth quarter of 2025.
Taking part banks have reportedly been knowledgeable that discussions could be briefly paused. Authorities are reevaluating the function of a CBDC as they’re pivoting towards regulating non-public stablecoin issuers, the official famous.
The Financial institution of Korea had been getting ready to develop its CBDC testing below “Project Han River,” which started earlier this yr with a consortium of seven banks.
The second part was anticipated to incorporate options reminiscent of peer-to-peer transfers and service provider funds. Nevertheless, banks reportedly raised issues over excessive prices and the dearth of a transparent commercialization plan, prompting the central financial institution to reassess the challenge’s future.
As a substitute, the central financial institution will proceed to watch progress on a legislative proposal that might set up a regulatory framework for Korean won-based stablecoins. The proposed laws, launched below the Digital Asset Fundamental Act, outlines licensing necessities for issuers and contains provisions for reserve administration and person safety.
The transfer aligns with President Lee Jae-myung’s broader agenda to speed up stablecoin improvement. Since taking workplace earlier this month, Lee has prioritised the institutionalisation of KRW-backed digital tokens as a strategic monetary initiative.
His administration helps a licensing regime that might allow firms with as little as ₩500 million ($370,000) in fairness capital to situation stablecoins, topic to regulatory approval.
Democratic Social gathering leaders have framed the rollout of won-denominated stablecoins as important to preserving South Korea’s financial sovereignty.
Social gathering lawmakers argue that native crypto markets are overly reliant on U.S. dollar-pegged belongings like USDT and USDC, and warn that continued dominance by international stablecoins might undermine home monetary coverage.
These stablecoins reportedly accounted for over ₩57 trillion ($42 billion) in buying and selling quantity through the first quarter of 2025.
Min Byeong-deok, head of the Digital Asset Committee, has warned that with out swift motion, Korea could lag within the race for stablecoin management.
He contends that the marketplace for stablecoins might surpass even synthetic intelligence or semiconductors and has known as for regulatory measures to assist issuance by compliant entities.
Business banks have already responding to this coverage shift. Eight of the nation’s largest banks, together with KB Kookmin, Shinhan, Woori, and Nonghyup, have launched a joint initiative to situation a KRW-pegged stablecoin.