TLDR
South Korea halts CBDC trials as banks shift focus to stablecoins.
Eight banks to launch won-pegged stablecoin by 2026 amid rising support.
CBDC pilot paused after phase one with 100,000 users and major retailers.
President Lee backs stablecoins; bill proposes 500M KRW minimum capital.
South Korea’s central bank has paused the next phase of its central bank digital currency (CBDC) pilot as interest shifts toward stablecoins. The decision comes after banks participating in the tests raised concerns about the project’s cost and unclear direction, while government support for stablecoin development continues to grow.
CBDC Testing Halted Amid Government Focus on Stablecoins
The Bank of Korea has informed seven local banks that it will temporarily suspend the upcoming round of CBDC tests. These trials began in April, with the first stage running until June 30. The next phase, originally scheduled for later this year, has now been delayed.
According to local news outlets Yonhap News Agency and The Chosun Daily, the central bank is reevaluating the timing of the second round. A senior official at one participating bank told Yonhap that the Bank of Korea is waiting for the government to provide clearer guidance on stablecoins before resuming the CBDC trials.
President Lee Jae-myung, who was recently elected, made digital assets a central part of his campaign. He proposed allowing the issuance of stablecoins backed by the Korean won and supporting broader use of blockchain-based financial products.
Banks Prefer Stablecoin Model Over CBDC Pilot
Several banks involved in the CBDC pilot expressed dissatisfaction with the ongoing project. One senior banking official told Yonhap that the second round of the trials was “on the verge of collapse” due to high costs and the absence of a concrete commercialization plan.
The central bank had suggested possibly shifting the second trial phase to early 2026 and reducing the number of participating institutions. However, banks have shown more interest in building stablecoin projects instead of continuing with the CBDC pilot.
Eight banks in South Korea have reportedly partnered to develop a won-pegged stablecoin, expected to launch in 2026. Among these are KB Kookmin, Shinhan, Woori, and NongHyup — all of which participated in the first round of CBDC tests.
Banks appear more motivated to pursue stablecoin projects, as these tokens present more direct commercial opportunities. One official noted that the stablecoin approach offered a clearer financial path than the costly and uncertain CBDC pilot.
Trial Details and Current Market Activity
The initial stage of the CBDC pilot included 100,000 users and several participating merchants. It tested basic payment features using the central bank-issued digital currency. Participants included large retailers such as 7-Eleven stores in the city of Gunpo.
The second phase was expected to expand merchant participation and include remittance functionalities. However, the halt has created uncertainty around the project’s future timeline and scope.
Meanwhile, the shift in focus has affected financial markets. Following the news of the CBDC suspension, shares in KakaoPay dropped 7% by mid-day trading on Monday, and Hecto Financial shares were down 5%. In contrast, KB Financial Group saw a 0.8% rise, while Shinhan Financial shares increased by 1.6%.
Government Push for Stablecoins Shapes Industry Direction
President Lee’s administration recently proposed a bill allowing local companies to issue stablecoins under new regulatory conditions. The bill requires firms to have a minimum capital of 500 million Korean won, equivalent to about $370,000, to issue such tokens.
The Bank of Korea is now observing how this legislative push will influence digital asset development across the country. One official noted that the stablecoin strategy may be integrated into the broader digital currency framework in the future.
As banks shift their attention, the central bank may need to reevaluate the long-term role of a CBDC in South Korea’s financial system. For now, the project remains paused as stablecoins gain institutional momentum and political backing.
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