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Report: South Korea Hits Pause on Digital Won as Stablecoin Craze Sparks Debate

June 30, 2025





 The Bank of Korea (BOK) has put its digital won initiative on hold, signaling a major shift as stablecoins gain traction under the new administration’s push for wider market participation.

BOK’s Strategic Shift

  • Digital Won Program Suspended
    Citing growing interest in stablecoins, the BOK paused development of its CBDC project to reassess its approach amid changing market dynamics.

  • Presidential Influence
    South Korea’s new president, Lee Jae Myung, advocates opening the stablecoin market to more players, proposing laws to let smaller companies issue won-backed stablecoins.

New Legislative Landscape

  • Lower Barriers for Issuers
    Proposed legislation would allow businesses with as little as 500 million won (~$370,000) in equity to create stablecoins pegged to the won, aiming to stimulate innovation and competition.

  • Regulatory Caution Amid Optimism
    The BOK’s pause echoes a global wave of skepticism toward CBDCs, focusing on tightly regulating stablecoins to avoid financial instability.

Global Trends and Regulatory Moves

  • International Momentum
    The U.S. Senate recently passed a stablecoin regulatory framework, while Hong Kong and Taiwan explore similar measures, underscoring a global regulatory race.

  • Competitive Pressure
    Federal Reserve Governor Christopher Waller highlighted stablecoins as a disruptive force, enabling nonbanks to challenge traditional payment systems and potentially reduce costs.

Cautious Rollout in South Korea

  • Gradual Introduction Recommended
    Ryoo Sang-dai, BOK’s senior deputy governor, urges starting stablecoin issuance with well-regulated banks before expanding to non-bank issuers to mitigate risks.

  • Banking Sector Divisions
    Not all financial institutions support stablecoins, with concerns over their reliability and impact on the financial system.

Stability Concerns and Criticism

  • BIS 2025 Report Highlights Risks
    The Bank for International Settlements warns that most stablecoins fail to meet core currency criteria:

    • Price stability

    • Universal trust and acceptance

    • Resistance to criminal misuse

    • Adequate credit flexibility to support economic functions

Conclusion

South Korea’s pause on its CBDC project amid the booming stablecoin market illustrates the complex balancing act regulators face: fostering innovation while safeguarding financial stability in an evolving digital economy.

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