South Korea Halts CBDC Tests Amid Stablecoin Surge
By: Isha Das
In a significant policy shift, South Korea's central bank has decided to suspend its central bank digital currency (CBDC) testing program. The Bank of Korea made this decision in light of the country's growing focus on promoting stablecoins. This strategic pause aims to realign the government’s efforts toward enhancing the adoption and regulation of stablecoins.
South Korean banks participating in the CBDC trials have expressed interest in exploring the potential of stablecoins, prompted by the government's interest in these digital assets. This development aligns with the new administration's agenda, led by President Lee Jae-myung, to foster a crypto-friendly environment. His administration, which recently took office, is prioritizing stablecoin issuance, allowing firms with relatively modest capital to engage in creating stablecoins under the Digital Asset Basic Act.
This movement towards stablecoins reflects a broader trend observed in the financial ecosystems worldwide. Notably, Hong Kong is introducing a regulatory framework beginning August 1, 2025, under the Stablecoins Ordinance. This initiative addresses the region's dependence on the U.S. dollar by mandating Hong Kong Monetary Authority licensing for fiat-referenced stablecoin issuers. This regulation is seen as part of a broader strategy to fortify Hong Kong's financial infrastructure and align with China’s goal of reducing reliance on the U.S. dollar, evidencing the commitment to bolster regional and cross-border payment systems through stablecoin integration.
Such global responses underscore the evolving nature of the digital asset landscape, as countries adjust their financial strategies to incorporate stablecoins. This shift places emphasis on stablecoin regulation as a means of advancing economic goals and enhancing financial technology frameworks. For South Korea, the pause on CBDCs marks a tactical pivot towards a more agile and potentially beneficial strategy involving stablecoins, indicating an ongoing global evaluation of digital currency frameworks.
