The Bank of Korea has suspended key central bank digital currency testing just months after launching it, raising questions about the country’s shifting digital finance strategy.
South Korea’s central bank was expected to be at the forefront of CBDC development in Asia. Now, its sudden decision to freeze progress has taken industry insiders and global observers by surprise.
Banks Were Ready—Then Came Politics
The CBDC pilot, involving seven of the country’s biggest banks, had quietly begun in April. It was the second major phase in Korea’s digital won ambitions, meant to test how the virtual currency could be used for everyday retail payments.
But the Bank of Korea notified the participants last weekend that the program would be put on hold indefinitely.
“Everything was moving along,” said a senior official at one participating bank, speaking anonymously to local outlet Yonhap. “Then the government’s stance on stablecoins got louder, and suddenly we’re all told to wait.”
Two sentences later, he added, “We’re still not sure what to tell our teams.”
Lee’s Crypto Charm Is Real—and Loud
President Lee Jae-myung was sworn in just two months ago. But even before that, he made his crypto love affair well known.
During his campaign, Lee rolled out an uncharacteristically detailed digital asset agenda. Among the flashiest promises? Legal greenlights for Korean-won-pegged stablecoins.
And that’s exactly what banks want. Issuing won-backed tokens could offer them flexibility without waiting on the slow crawl of central bank tech. Plus, they’d have more control.
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Stablecoins, unlike CBDCs, don’t require daily central bank interaction.
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Banks could operate them with minimal disruption to legacy infrastructure.
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Customer-facing innovation could come faster and cheaper.
It’s no mystery why private institutions are leaning into Lee’s proposal.
Why Does This Matter Outside Korea?
South Korea is one of the most tech-forward societies on the planet. With a population of 52 million, more than 30% own crypto in some form, according to 2024 data from the Financial Services Commission.
If Korea leans into stablecoins while shelving its CBDC ambitions, it could set a precedent for other developed economies watching from the sidelines. Japan and Taiwan, for example, have only just begun to explore digital currencies.
It’s a subtle shift, but a meaningful one.
One sentence here, just to break rhythm.
Behind the Sudden Pause: Confusion or Strategy?
The Bank of Korea hasn’t issued a public statement explaining its pause. But insiders say the reason is more political than technical.
“They need time to reassess,” said one financial regulatory consultant based in Seoul. “Lee’s administration is leaning toward a public-private model where banks issue stablecoins. The CBDC would be redundant, or worse, seen as competition.”
To complicate things further, there’s little regulatory clarity right now. The Ministry of Science and ICT and the Financial Services Commission haven’t finalized how stablecoins will be monitored.
So the CBDC, for now, has been quietly shelved.
What’s the Risk in Waiting?
Halting a pilot halfway through doesn’t come without consequences. Technical teams from banks, fintech firms, and the Bank of Korea have already poured resources into test environments, simulations, and compliance planning.
Some are privately frustrated.
“There’s no timeline, no next step, no clarity,” said one developer working on the CBDC sandbox for a major Korean lender. “It’s like we all showed up to play a game and someone walked off with the ball.”
At least three banks had been working on integrating the digital won into mobile banking apps. That work is now on hold.
South Korea’s Crypto Balance Sheet
Let’s take a quick look at how the two approaches compare:
| Feature | CBDC (Digital Won) | Stablecoin (Won-Pegged Token) |
|---|---|---|
| Issuer | Bank of Korea | Commercial Banks / Private Firms |
| Regulation | Full central oversight | Awaiting new government guidelines |
| Technical Control | Central bank infrastructure | Bank-managed blockchain/token tech |
| Retail Integration | Delayed | Potentially faster |
| Political Support | Uncertain under Lee | Strong backing |
That table sums it up better than any press release could.
Lee’s Crypto Vision Isn’t Just Talk
Lee isn’t the first politician to ride crypto promises into office. But he’s among the first to act so quickly.
He’s already instructed the Ministry of Economy and Finance to study frameworks for stablecoin issuance. A bill related to digital asset licensing is expected before year-end.
If stablecoins get the nod, expect an explosion in new token products from local banks. It could resemble Japan’s digital yen plans but with a more competitive structure.
One key official at the Financial Supervisory Service reportedly told Chosun Daily, “CBDC might be more of a reference model now, not an endpoint.”
That sounds polite. But read between the lines—it’s a pivot.
