The Bank of Korea intends to let private businesses manage stablecoins while keeping its focus on safeguarding payment and monetary stability. Governor Hyun Song Shin outlined this stance during an October 12 National Assembly audit in Seoul. Furthermore, the central bank plans to utilize its own digital currency rather than stablecoins for settling tokenized government bonds during a 2027 trial.
Why the Bank of Korea Will Not Operate Stablecoins
In response to questions from lawmaker Lee Jun-seok, Shin stated, “It is right for stablecoins to be handled by the private sector.” He noted that stablecoins are built to operate across open blockchain networks separate from central bank funds, though the Bank of Korea will offer guidance on matters impacting the broader monetary system.
Nevertheless, these comments did not grant approval for unrestricted stablecoin issuance. Citing the need for financial protections, the central bank had previously backed bank-led consortia when won-pegged stablecoins were first introduced. Shin neither rescinded that stance nor introduced any new licensing regulations.
Project Hangang Keeps Commercial Banks in Charge
Shin also drew a distinction between private stablecoins and Project Hangang, an initiative that pairs institutional central bank digital currency with deposit tokens created by commercial lenders. While the central bank handles interbank settlement, individual banks oversee personal data and customer deposits. Shin dismissed worries that the initiative would grant the central bank visibility into private citizens’ transactions.
He further mentioned that the Bank of Korea has not evaluated a retail, general-purpose CBDC since 2023. According to an October 8 statement from the bank, preparations are underway for further consumer payment trials in 2026. The upcoming phase of Project Hangang will grow the number of participating banks from seven to nine and raise the pool of eligible users from 100,000 to 500,000.
Wholesale CBDC Chosen for 2027 Treasury Pilot
To support its 2027 government bond trial, the Bank of Korea will rely on wholesale CBDC instead of private stablecoins for settling tokenized Treasury operations. Documents provided to lawmakers indicated that money issued by the central bank will link bond transfers directly to payments, thereby lowering settlement failure risks. The initiative will evaluate government bonds issued as blockchain-based digital assets.
The bank formed an asset tokenization division in August and has held discussions regarding the pilot with the Ministry of Economy and Finance. In a separate endeavor, Project Hangang intends to test 30 billion won worth of electric-vehicle charging subsidies through deposit tokens. Although the budget for the project climbed 61.8% to 12.52 billion won for 2026, any potential link between the two initiatives has yet to be determined.
Shin Flags Risks From Overseas Crypto Cards
During the same legislative audit, lawmaker Kim Nam-joon raised inquiries regarding crypto-linked cards that convert digital assets into traditional currency for transactions. Shin warned that dollar-pegged stablecoin cards issued abroad present risks related to stricter regulatory oversight and increased fees. He also pointed out that an additional intermediary manages the currency conversion before merchants get paid.
Kim pointed out that average daily stablecoin trading volume in South Korea reached approximately 200 billion won as of July. He additionally cited a global estimate showing $10 billion in cumulative card payments, though the portion originating from South Korean users was not specified.
Lawmakers additionally raised concerns regarding consumer protection and deficiencies in customs reporting. Following inquiries concerning account freezes, hacking incidents, and refunds, Shin stated, “We will continue to monitor closely and consult closely with relevant agencies.”
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