Bank of Korea Delays Digital Currency Pilot Amid Stablecoin Support

The Bank of Korea has recently announced a delay in the second phase of its digital currency pilot, which was initially scheduled for later this year. This decision comes as the newly elected government, under President Lee Jae-myung, has shown increasing support for private-sector stablecoins backed by the Korean won, a key campaign promise.

Instead of advancing with its own digital currency, the central bank is now in a holding pattern, awaiting the development of stablecoin policy. A draft bill submitted this month proposes that companies be allowed to issue won-pegged tokens, provided they meet certain minimum capital requirements.

Banks involved in the pilot program have expressed frustration privately, citing a lack of a clear commercial path for the CBDC and the high costs associated with participation. The first test phase, which concluded in June and involved 100,000 users, was deemed too resource-intensive. The second round, intended to expand the scope to more merchants and remittance services, is now uncertain and may be pushed to 2025 with a smaller group of participants.

Meanwhile, several major banks, including KB Kookmin, Shinhan, Woori, and NongHyup, are reportedly planning to launch a won-backed stablecoin by next year. These institutions view the potential for returns and market relevance as greater with stablecoins than with a centrally issued digital currency.

As Korea's crypto policy continues to evolve, the focus appears to be shifting away from central bank innovation and toward a stablecoin-driven financial future. This shift reflects a broader trend in the region, where private-sector initiatives are gaining traction as governments and financial institutions explore the potential of digital currencies.