South Korea Halts CBDC Testing to Focus on Won-Backed Stablecoin Development

In Brief:

The Bank of Korea pauses its CBDC pilot project, "Project Han River," to prioritize the launch of a won-backed stablecoin.

This shift reflects growing support for private stablecoin development and clearer regulatory pathways compared to government-backed digital currencies.

South Korea's Bank of Korea has decided to halt its central bank digital currency (CBDC) pilot, called "Project Han River," to focus on the development and launch of a won-backed stablecoin. The decision follows concerns raised by banks regarding the high costs of the CBDC pilot and the lack of clear commercialization plans.

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The Bank of Korea had originally scheduled the CBDC project for a 2025 launch but has since paused it to explore stablecoin alternatives and align with the government's regulatory stance on digital assets.

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This move also reflects broader political and economic priorities, with President Lee Jae-myung's administration showing strong support for stablecoin regulation. Several banks, including KB Kookmin and Shinhan, have already initiated a won-backed stablecoin project, indicating the growing interest and potential for private sector-driven solutions.

The shift also highlights South Korea's emphasis on maintaining monetary sovereignty, particularly in light of the growing influence of foreign stablecoins in the market.

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