The central bank of South Korea has suspended its digital currency initiative following the president's support for stablecoins tied to the South Korean won.
Suspension of the CBDC Project
The Bank of Korea informed participating banks that discussions on the second phase of the Hangang CBDC rollout have been put on hold. This decision comes less than three months after the pilot program, which allowed 100,000 citizens to make purchases using the state’s CBDC. On average, each of the seven participating banks spent $3.7 million on the project.
Presidential Support for Stablecoins
President Lee Jae Myung is actively supporting the legalization of won-backed stablecoins, aiming to strengthen the market for these digital assets. This will create a legal framework for their use in the country and prevent capital outflows into foreign stablecoins. Lawmaker Min Byeong-deok proposed a bill to establish a licensing system for stablecoin issuers.
Current Cryptocurrency Market Situation in South Korea
South Korea remains one of the largest countries in spot cryptocurrency trading. Government data shows that by the end of last year, over one in five South Koreans owned and traded cryptocurrencies. This trend is similar to moves in the United States, where regulations for US dollar stablecoins are being actively developed.
The suspension of the CBDC project in South Korea amidst the growing interest in stablecoins highlights a shift in the country's digital financial policy. The next steps will depend on the regulatory framework and collaboration among key market participants.
