Local reports indicate that the Central Bank of South Korea has suspended its Pilot Program Central Bank Digital Currency (CBDC), so that the focus of the nation to a private individual, the bank-led Stablecoin initiative has turned.
The Bank of Korea (Bok) stopped its ‘Han River project’, after increasing pressure from commercial bank partners who quoted priceless costs and the absence of a viable business model, as the Korea Herald reported.
The project launched earlier this year Was a two -fold system with a wholesaler CBDC for interbancial regulation and tokenized deposits for retail use by 100,000 citizens. The seven participating banks, however, spent almost 35 billion (about $ 26 million) on the first three months and were not willing to continue without a clear path to profitability.
A last-minute offer from Bok-Gouverneur Rhee Chang-Yong to cover half of the costs for the second phase of the project was rejected, indicating that the concerns of the banks were fundamentally for the business case, not just the costs.
In the vacuum left by the project led by the State, a consortium of eight large commercial banks, including KB Kookmin, Shinhan and Woori, has formed to develop a won Stablecoin. This initiative is actively supported by the Korea Financial Telecommunications and Clearings Institute (KFTC) and strives for a public launch at the end of 2025 or early 2026.
The banks see a clear commercial advantage in issuing their own stablecoins, using their customer base to create new income flows and prevent disinter mediation by fintech rivals or a currency run by the state.
This strategic pivot was made possible by a shift in government policy under President Lee Jae-Myung, who campaigned on a pro-Crypto platform that included a promise to approve won-Pegged Stablecoins.
President Lee’s administration is quickly following the “Digital Asset Basic Act”, legislation that offers a legal framework for Stablecoins. In particular, the law grants the primary legal authority to the Financial Services Commission (FSC), not the Bank of Korea, and sets a low capital requirement of ₩ 500 million (approximately $ 370,000) to encourage competition.
The private sector has moved aggressively to guarantee its position. KB Kookmin, the largest bank in the country, submitted 17 different trademarks for potential Stablecoin tickers such as KBKRW, who called it a ‘preventive movement’. In the meantime, Shinhan Bank has been preparing for years at the moment and is already taking the international transfer certificates of concept with Stablecoins in November 2021.
Although Bok-Gouverneur Rhee has publicly admitted that won-backed stablecoins are needed, he and other central bank officials continue to express serious worries. They warn that a proliferation of private stablecoins could undermine the monetary policy, create systemic risk that is reminiscent of the collapse of 2022 Terra/Luna and accelerate the capital flight while users change stabilans for alternatives with dollar-piped alternatives.
The volume of USD-Pegged Stablecoin transactions in Korea only reached 56.95 trillion in the first quarter of 2025 ($ 41.6 billion).
The Central Bank has argued for a more careful rollout, so that only very regulated banks are allowed to spend Stablecoins in the first instance before they expand to non-banking entities.
In the meantime, De Bok has framed its suspended CBDC work as a potential ‘counter -measure for Stablecoins’, a public option to breathe new life if the private market turns out to be too volatile.