South Korea Suspends CBDC Tests as Banks Shift Focus to Stablecoins

The Bank of Korea halts digital currency trials amid rising interest in won-backed stablecoins

South Korea has paused its central bank digital currency (CBDC) testing program as local banks turn their attention to issuing stablecoins. The Bank of Korea reportedly informed participating banks that the second round of CBDC trials would be delayed until next year.

This shift comes amid growing government support for stablecoins and renewed interest from banks in creating private digital tokens backed by the Korean won.

What has happened so far?

• South Korea launched CBDC trials in April 2025.
• Seven banks participated in the first round of testing.
• The initial phase included 100,000 users and select merchants like 7-Eleven.
• The second phase was planned for later this year but is now postponed.

President Lee Jae-myung, elected earlier this year, campaigned on promises to allow local currency stablecoins. His party proposed a bill to permit issuance of these tokens with a minimum capital requirement of 500 million won (about $370,000).

Banks push back on CBDC project costs

Banking officials have expressed dissatisfaction with the CBDC pilot’s high costs and unclear roadmap. According to Yonhap News Agency, the second phase of testing was already “on the verge of collapse.” Some banks reportedly questioned the commercial viability of the project.

The Bank of Korea is now considering limiting the number of financial institutions involved in the next round of trials. It may also shift the timeline to the first half of 2026.

Stablecoin adoption gains momentum

While the CBDC program faces delays, interest in stablecoins is growing. Eight South Korean banks, including KB Kookmin, Shinhan, Woori, and NongHyup, are reportedly working to launch a won-backed stablecoin by 2026.

These banks see more direct financial benefit from issuing private stablecoins, compared to participating in a central bank-led initiative. Stablecoins also align more closely with existing business models and customer-facing products.

Market reactions and stock movement

News of the CBDC pause triggered a mixed response in South Korea’s fintech sector:

• KakaoPay Corp shares fell by 7%.
• Hecto Financial dropped around 5%.
• KB Financial Group gained 0.8%.
• Shinhan Financial Group rose 1.6%.

These shifts reflect the market’s recalibration in response to the government’s evolving crypto policy.

What’s next for South Korea’s digital currency plans?

The pause in CBDC testing gives policymakers and banks time to evaluate how a central bank digital currency would coexist with stablecoins. As the stablecoin bill progresses, financial institutions may prioritize private tokens for retail payments and remittances.

The outcome will shape South Korea’s approach to digital currency adoption, balancing regulatory oversight with financial innovation.