The Bank of Korea (BOK) has suspended its Central Bank Digital Currency (CBDC) project, with all involved entities already informed of the new development.
By Godfrey Benjamin
Editor Hamza Tariq
Updated
3 mins read
Local newspaper Business Times recently reported that the Bank of Korea (BOK) has paused its Central Bank Digital Currency (CBDC) project.
Before making this decision, the project had advanced to the stage of developing a pilot program with participating banks. However, the BOK ultimately decided that suspending it was the best course of action for now.
According to the report, an unidentified BOK official revealed that all discussions related to the CBDC initiative have been halted. The second round of testing, originally scheduled for later this year, will no longer take place. 7-Eleven, Inc., a leading convenience store chain, was one of the participating businesses in the experiment.
According to the initial plan, customers would have been able to use the CBDC to make payments at 7-Eleven from April 1 to June 30. During this phase, participants were to receive a 10% discount on all purchases. The aim was to evaluate transaction speed, security, and customer response ahead of a potential full-scale rollout.
Following the suspension, all involved parties, including participating banks, have been officially informed.
This decision comes amid growing support from the Korean government for local currency stablecoins over a national digital currency.
A senior official from one of the seven banks slated to participate in the tests noted that the central bank wants to first observe the government’s plans for stablecoins before determining whether a CBDC can coexist with such tokens.
Eight major South Korean banks have already come together to launch a won-pegged stablecoin. The participating banks include KB Kookmin, Shinhan, Woori, Nonghyup, Corporate Bank, Suhyup, Citi Korea, and SC First Bank.
They are collaborating with the Open Blockchain and Decentralized Identity (DID) Association, as well as the Financial Settlement Institute, to advance this initiative.
While the Bank of Korea is not opposed to stablecoins in principle, it does have certain concerns.
Governor Rhee Chang-yong expressed that stablecoins could facilitate currency swaps into the U.S. dollar, which might undermine the central bank’s ability to effectively manage the won.
Deputy Governor Ryoo Sangdai also emphasized that the rollout of stablecoins should be gradual and initially led by banks, given their higher levels of financial regulation.
He highlighted concerns about potential systemic risks, stating, “It would be desirable to initially allow stablecoin issuance primarily through banks, which are subject to higher levels of financial regulation, and gradually expand it to the non-banking sector.”
Broadly speaking, the stablecoin market is beginning to take shape and gain momentum, particularly following the introduction of the GENIUS Act in the United States.
In a similar move, South Korea has made a bold step toward regulating the stablecoin sector within its jurisdiction. On June 10, Democratic Party lawmaker Min Seok introduced a new bill aimed at establishing a regulatory framework for stablecoins.
Notably, the Digital Asset Basic Act bill includes a new licensing regime for stablecoins. In Seok’s opinion, this bill will be crucial in helping South Korea excel in the global digital economy.
Specifically, he ensured that the new stablecoin rule was in line with the existing law in South Korea that governs cryptocurrencies.
Disclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article aims to deliver accurate and timely information but should not be taken as financial or investment advice. Since market conditions can change rapidly, we encourage you to verify information on your own and consult with a professional before making any decisions based on this content.
Benjamin Godfrey is a blockchain enthusiast and journalist who relishes writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desire to educate people about cryptocurrencies inspires his contributions to renowned blockchain media and sites.
