South Korea Halts CBDC Plan as Won-Backed Stablecoins Surge

- South Korea suspends its CBDC pilot to focus on private, won-pegged stablecoins. - President Lee Jae Myung advocates for stablecoins as a key digital asset strategy. South Korea's central bank, the Bank of Korea (BOK), has suspended its central bank digital currency (CBDC) project. The bank will now shift its focus to private stablecoins backed by the Korean won. On June 30, 2025, Yonhap reported that this strategic pivot aligns with President Lee Jae Myung's endorsement of stablecoins. The President considers them crucial for advancing the nation’s financial innovation and reducing its dependency on foreign digital assets. The BOK notified participants in its “Hangang” CBDC pilot program that it has suspended discussions on progressing to the second phase. This decision comes just three months into trials where 100,000 citizens tested CBDC payments. The bank cited rising costs and challenges of coexistence with private digital currencies as key factors. Participating banks reportedly incurred an average cost of $3.7 million each, and the project lacked a clear path for a nationwide expansion. President Lee’s administration prioritizes stablecoins over CBDCs to curb capital outflows, foster local fintech innovation, and align with emerging global regulatory frameworks. Following his election, ruling party lawmaker Min Byeong-deok led regulatory reforms. These reforms propose a licensing scheme for stablecoin issuers, requiring a minimum capital of 500 million won ($370,000). This policy pivot has catalyzed interest from major firms like Naver and Kakao, which have now filed trademarks for won-backed stablecoins. In addition, a consortium of eight leading domestic banks is also exploring a centralized stablecoin issuance project. This move signals strong corporate alignment with the government’s strategy. BOK Governor Lee Chang-yong acknowledged the potential of private stablecoins operating within regulatory boundaries, emphasizing their appeal when proper safeguards are in place. South Korea’s evolving approach mirrors worldwide trends, such as U.S. proposals to regulate dollar-pegged stablecoins and ensure their financial soundness. As of 12:00 UTC on June 30, Bitcoin (BTC) traded at $30,584 (+1.8% in 24-hour volume), and Ethereum (ETH) was at $1,935 (-1.5% in 24-hour volume). Ripple (XRP) traded at $0.67 (+3.2%). These market dynamics reflect a rapidly evolving digital asset landscape as South Korea bets on stablecoins to shape its financial future.