The Bank of Korea has stopped its mission to create a Central Bank Digital Currency (CBDC) before the plan, named ‘Project Han River,’ entered its second phase.
The project came to a halt due to growing dissatisfaction among participating banks and active discussions about introducing a won-based stablecoin led by the private sector. The first pilot test began in March with seven banks and aimed to transform deposited funds into electronic tokens for use at merchant payment locations, similar to physical cash. The project ended on the 30th, with the plans for a second pilot in October 2025 being postponed to reduce uncertainty.
Disputes between won-pegged stablecoin and CBDCs
The suspension of the CBDC project reflects the disagreements between the Bank of Korea and commercial banks regarding the issuance of a won stablecoin. The government’s decision to create the stablecoin raised questions about the practicality of CBDCs, especially as international counterparts like the US and EU are working on stablecoin rules.
The Bank of Korea had previously agreed to share some of the costs of the second test with the banking sector to reduce financial burdens, but the growing interest in stablecoins has shifted the focus. Banks that participated, such as KB, Hana Bank, and Kakao Bank, are now focusing on capturing the stablecoin market. They applied for trademarks related to stablecoins and created a consortium to explore the issuance operations. Hana Bank plans to join this association in the near future.
Some argue that CBDCs, with their public nature, and stablecoins, which are flexibly used in the private digital landscape, can function in parallel and coexist. This could be possible using DLT (Distributed Ledger Technology) or compatible infrastructure. Looking outside of Korea, countries like Hong Kong utilised both CBDCs and privately led stablecoins in their digital asset adoption process, with the appropriate regulatory framework.
Kiwoom Securities supports stablecoins backed by CBDCs but believes that there’s a need for legal clarity, AML systems, and policy changes. The company’s investment strategy team warns of risks from overlapping functions and urges clear standards for interoperability, issuance, and consumer protection.
