The Bank of Korea (BOK) has reportedly halted its Central Bank Digital Currency (CBDC) project following the South Korean government’s focus on stablecoins. The shift has left project participants with “no long-term roadmap” and banks pivoting to this sector.
BOK Suspends Second Phase Of CBDC Testing
On Sunday, local news outlet Yonhap News Agency reported that the Bank of Korea had notified banks participating in the Han River Project that the second phase of CBDC testing would be suspended.
The BOK and seven banks began the first phase of testing in April, targeting 100,000 financial consumers and planning to complete it by June 30. Originally, the project was scheduled to start its second phase at the end of the year, testing peer-to-peer transfers, expanding payment merchant locations, and simplifying authentication methods.
However, banks reportedly raised concerns about the “excessive cost burden without concrete plans for commercialization,” leading to the project’s pause. Notably, the banking sector is bearing the cost of the project and recently demanded that the Bank of Korea provide a clear long-term roadmap with plans for commercialization.
Banks requested the BOK to “establish a ‘CBDC General User Real-Transaction Test Task Force’ involving all relevant departments of the Bank of Korea and banks to develop a long-term roadmap including post-test commercialization plans, and then realistically adjust the project schedule based on this roadmap.”
As a result, the BOK has concluded that it must clarify its internal stance and schedule regarding digital assets, as stablecoin momentum grows and discussions in the National Assembly and the private sector intensify.
According to a senior official at a commercial bank, the Bank of Korea explained that it would “wait and see how the situation develops, given that the legalization of stablecoins is currently underway, while it is unclear how CBDC, stablecoins, and deposit tokens differ and can coexist.”
Similarly, another senior official affirmed that the atmosphere is shifting toward stablecoins, detailing that “Until the dinner meeting between Bank of Korea Governor Lee Chang-yong and bank presidents on the 23rd, the atmosphere was not like this, but the situation has changed significantly since then.”
Nonetheless, the Han River Project could be reconsidered in 2026, according to another bank official, who claimed that the Bank of Korea mentioned the possibility of revisiting CBDC testing and “pushing forward with it around the first half of next year.”
Banks Prepare For Stablecoin Legislation
Following this development, banks participating in the CBDC project are expected to shift to stablecoin issuance as related legislation gains support, preparing for issuance with other banks or non-bank entities.
At the start of the month, a member of South Korea’s ruling party, Min Byeong-deok, introduced a comprehensive bill to establish a more structured regulatory framework for crypto assets in the country.
As reported by Bitcoinist, the Democratic Party of Korea (DPK) lawmaker proposed the Digital Assets Basic Act to complement the Virtual Asset Investor Protection Act and offer a broader legal foundation for the industry. Additionally, it focuses on implementing a licensing system for stablecoin issuers and clear rules.
The banking sector is considering a business model in which banks establish a joint venture to collectively issue stablecoins, while contacting various non-bank companies to prepare for the legalization and issuance of stablecoins.
A bank official affirmed that “It is unclear whether banks or big tech (large IT companies) and fintech (financial technology companies) will be the issuers of stablecoins,” adding that they “have no choice but to prepare for both scenarios before legalization.”
Another bank official stated that it is necessary to collaborate with fintech companies for scalability, explaining that banks are “not only discussing stablecoins with the Bank of Korea and other banks, but also meeting regularly with ‘payment’ companies, cryptocurrency exchanges, and blockchain companies to prepare for the issuance of stablecoins.”
