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South Korea Suspends CBDC Testing Program as Banks Focus on Won Stablecoins
The Bank of Korea has announced the suspension of its central bank digital currency (CBDC) testing program, a move that is expected to have significant implications for the country’s fintech sector. According to reports, the decision was taken after banks and regulators expressed concerns over the high costs associated with CBDC development and the lack of clear commercialization plans.
It appears that eight major South Korean banks have instead decided to collaborate on the launch of a won-backed stablecoin by next year. The banks, which include KB Kookmin, Shinhan, Woori, and NongHyup, believe that issuing their own won-backed stablecoins will be more profitable than engaging in CBDC trials.
The government is pushing for legislation that would allow companies to issue won-backed stablecoins with a minimum capital requirement of 500 million Korean won ($370,000). The proposed Digital Asset Basic Act aims to establish regulatory frameworks that support compliant domestic stablecoin issuers. This move comes amid growing concerns about the dominance of foreign dollar-pegged stablecoins in the market.
In the first quarter of 2025, foreign stablecoins accounted for over 57 trillion won ($42 billion) in trading volume. The government believes that by establishing its own stablecoin ecosystem, South Korea can regain control over its digital currency environment.
The CBDC suspension news was met with mixed reactions from investors, with KakaoPay shares declining by 7% and KB Financial Group’s stock gaining 0.8%.
Source: coincentral.com
