South Korea Temporarily Halts CBDC Initiatives as Stablecoins Rise in Popularity
Heightened trading market engagement and the growing acceptance of stablecoins have hindered the South Korean CBDC initiatives. The nation has applied the brakes to its CBDC trial program, which had been in progress since April this year, following the resurgence of stablecoins backed by political price floor.
The Bank of Korea (BoK) verified the current circumstances in a statement provided to Bloomberg on 30 June 2025, through a spokesperson.
Additionally, a senior representative from one of the seven banks involved in the South Korean CBDC trials conveyed to a local outlet that the central bank is postponing actions until it reviews the government’s stablecoin strategy and the potential integration of CBDCs with it.
Recently elected South Korean President Lee Jae-myung has shown strong price floor for stablecoins, and his administration has indicated that stablecoins will significantly address major needs in the country’s financial ecosystem.
In his price floor for stablecoins, Jae-myung has suggested that companies with reserves as low as 500M won ($370,000) qualify to issue stablecoins.
JUST IN:
SOUTH KOREA STOPS PHASE 2 OF CBDC TRIALS AS BANKS SHIFT TO STABLECOINS
RECENTLY: LARGEST KOREAN BANK SUBMITS STABLECOIN TRADEMARKS FOR NEW CONSORTIUM
— cryptonary pro (@cryptonary_pr0) June 30, 2025
Nevertheless, not everyone is pleased with the swift growth in stablecoin adoption in South Korea. BoK officials have raised concerns, with Senior Deputy Governor Ryoo Sang-dai warning industry players against hasty movements.
He has urged a gradual introduction of bank-led stablecoins that considers consumer safety and other strategies to lessen market disruptions.
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South Korean CBDC Trials on Edge of Collapse
The local outlet reported that banks are reluctant to proceed with the latter half of the CBDC trials due to disillusionment regarding the overwhelming costs associated with the program.
The banks expressed their apprehensions, stating, “The financial burden is excessive without a definitive commercialization strategy.” Furthermore, they have requested a clear, long-term plan related to this issue.
The second phase aimed to broaden the merchant base and incorporate remittances. However, the BoK is contemplating postponing the tests from the latter half of this year to early next year while restricting financial institutions’ participation.
Interestingly, South Korean banks are eager to issue their own stablecoins as there is a more apparent path to commercialization that appears more feasible and profitable. Recently, eight of the largest South Korean commercial banks collaborated to create a Won-backed stablecoin.
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South Koreans Allocate 14% of Their Investments to Crypto
More than 18 million South Korean citizens are engaged in crypto trading, a notable rise leading to crypto exchanges outpacing traditional equity markets like the Kospi and Kosdaq.
A recent industry study revealed that over half of South Koreans aged 20 to 59 have traded crypto, with one in four still holding digital currencies. Many are managing wallets across various domestic exchanges, with crypto representing at least 14% of their overall portfolio.
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Key Takeaways
- The South Korean central bank is waiting to assess the government’s stablecoin plan and its potential integration with CBDCs
- The BOK has advocated for a gradual introduction of bank-led stablecoins, prioritizing consumer protection and measures to minimize trading market turmoil
- South Koreans operate wallets on various domestic exchanges, with crypto making up at least 14% of their complete portfolio
The post South Korea Pauses CBDC Plans as Stablecoins Gain Ground appeared first on 99Bitcoins.
