South Korea Halts CBDC Trials as Banks Chase Stablecoin Boom

Yigit Taha OZTURK — Mon, 30 Jun 2025 13:00:09 +0000

As decentralized finance rapidly evolves, South Korea—a leading tech hub in Asia—is witnessing a dramatic pivot. The country’s ambitious digital currency project has hit the brakes, as local banks eye more lucrative stablecoin opportunities.

The Bank of Korea has officially paused the second phase of its central bank digital currency (CBDC) tests. Initiated in April, these tests were meant to evaluate the use of a digital won in real-world payments. However, recent government support for stablecoins appears to have shifted the momentum.

High Costs and No Clear Plan Push Banks Away

Sources from the seven participating banks say the CBDC project was already “on the verge of collapse.” The main reason? High costs and lack of a clear commercialization roadmap. Though over 100,000 users joined the initial trial, banks argue there’s little incentive to continue without policy clarity.

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Meanwhile, the government, under newly elected President Lee Jae-myung, is actively promoting stablecoins. A new bill tabled this month allows companies to issue Korean won-pegged stablecoins with a minimum capital of 500 million won (about $370,000). That legislation is quickly reshaping the country’s crypto landscape.

Won-Pegged Stablecoin Initiative Gains Traction

Eight major South Korean banks are now forming an alliance to launch a won-backed stablecoin by 2025. This group includes several CBDC trial participants: KB Kookmin, Shinhan, Woori, and NongHyup.

The move signals a significant shift in strategy. Banks appear more interested in building independent crypto products that offer tangible revenue streams rather than supporting costly central bank projects.

Following the announcement, local fintech stocks reacted swiftly. KakaoPay fell 7%, Hecto Financial dropped 5%, while KB Financial Group and Shinhan saw slight gains of 0.8% and 1.6%, respectively.

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The post South Korea Halts CBDC Trials as Banks Chase Stablecoin Boom appeared first on Coin Engineer.

South Korea Moves To Legalize Stablecoins With Bold Crypto Bill

Yigit Taha OZTURK — Tue, 10 Jun 2025 07:30:53 +0000

In a region already buzzing with digital innovation, South Korea is positioning itself to become a dominant force in the crypto economy. A shift in political leadership has triggered a wave of regulatory reform that could reshape the market entirely.

New President Acts Fast On Stablecoin Promise

Following his recent election win, President Lee Jae-myung has wasted no time delivering on campaign pledges around crypto. His ruling Democratic Party has introduced the “Digital Asset Basic Act,” aiming to permit the issuance of domestic stablecoins and foster a transparent, competitive crypto landscape.

Under the proposal, local companies will be allowed to issue stablecoins if they have a minimum equity capital of 500 million won ($368,000). Issuers must also maintain reserves to back the coins and receive approval from the Financial Services Commission, South Korea’s top financial regulator.

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The legislation seeks to legitimize stablecoin markets and drive broader adoption by ensuring regulatory clarity and investor protection.

Crypto Gains Mass Appeal Across South Korea

Interest in Bitcoin and stablecoins has soared in South Korea. In Q1 of 2024 alone, transactions involving major U.S. dollar stablecoins totaled 57 trillion won ($42 billion) across the country’s five leading exchanges, according to Bank of Korea data.

An estimated one-third of the South Korean population—around 18 million people—is now involved in the crypto market. Building on this momentum, President Lee is also pushing for Bitcoin ETF approvals and the inclusion of Bitcoin in the national pension fund’s investment strategy.

However, these ambitions face resistance from the Bank of Korea, which argues that private stablecoins could undermine the effectiveness of monetary policy.

Crypto Law Boosts Stocks, But Not Without Skepticism

Anticipation around the bill has already impacted financial markets. Shares in digital wallet provider KakaoPay surged up to 45% in five days following the announcement. Still, JPMorgan analysts caution that the rally may be premature, with real benefits from the legislation yet to materialize.

Despite the uncertainty, South Korea’s proactive legislative push sets a bold precedent in Asia’s ongoing crypto regulatory race.

The post South Korea Moves To Legalize Stablecoins With Bold Crypto Bill appeared first on Coin Engineer.