South Korea suspends CBDC as stablecoins gain traction locally

• Bank suspends Hangang CBDC pilot
• Won stablecoins gain political support
• Banks join forces to launch local currency

The Bank of Korea (BOK) has announced the temporary suspension of its CBDC initiative, Project Hangang, to “monitor the progress of legislation around stablecoins.” Meanwhile, stablecoins backed by the Korean won have been making inroads in the country, driven by political and business support.

CBDC on pause in Korea.

The Bank of Korea shelved its digital currency trials—just as major banks eye stablecoins instead. Costs are high, incentives unclear, and private tokens may move faster.

When stablecoins make more sense than CBDCs… who really controls the future of… pic.twitter.com/F5Ie8bGi9g

— Wess (@WessWeb3) June 30, 2025

Hangang’s pilot project involved about 100 users who tested the CBDC at partner stores of major local banks. The first phase, which began less than three months ago, is expected to be completed this month. However, the costs for financial institutions were significant: each of the seven participating banks paid out an average of 000 billion won – about $5 million.

The BOK communicated to banks that the continuation of the pilot will depend on the advancement of regulations on stablecoins, as it is not yet defined “how CBDCs, stablecoins and bank deposit tokens will coexist”. This lack of definition led to the suspension of the second stage of testing.

The move comes after US President Donald Trump pushed for a clearer regulatory framework on dollar-denominated stablecoins. Meanwhile, the South Korean government, led by Lee Jae-Myung, is advocating the issuance of won-pegged stablecoins to prevent foreign capitalization.

The initiative has gained significant local support: Lee’s close associate, Min Byeong-deok, has introduced a bill with specific regulations requiring licensing and requirements for stablecoin issuers. Tech companies including Kakao and Naver have already filed applications to launch won-pegged stablecoins on their mobile payment platforms.

The movement is intensifying with eight major banks in the country planning a joint venture to issue a stablecoin backed by the local currency. The BOK, through Governor Lee Chang-yong, acknowledged the usefulness of won-backed stablecoins, as long as “appropriate measures are implemented to manage risks.”

South Korea, home to one of the world’s largest cryptocurrency markets, expects more than 20% of its population to own or trade crypto by the end of 2024. This scenario reinforces the importance of clear and efficient regulation for local stablecoins.