South Korea Halts CBDC Trials as Banks Pivot to Stablecoin Development

South Korea's central bank has abruptly suspended its digital won testing program amid mounting resistance from commercial banks. The Bank of Korea postponed Phase II trials after financial institutions balked at the project's costs and unclear commercialization path.

Eight major banks are now collaborating on a won-pegged stablecoin initiative targeting 2025 launch. The shift comes as President Lee Jae-myung's administration prepares legislation setting modest $370,000 capital requirements for stablecoin issuers.

Participants in the CBDC pilot complained the government-run project drained resources from more viable stablecoin ventures. Merchants including 7-Eleven had processed 100,000 test transactions under "Project Han River" before the suspension.

Regulators express concern about foreign stablecoins like Tether and USDC dominating domestic crypto markets. The policy reversal highlights growing institutional preference for private-sector digital asset solutions over central bank experiments.