South Korea Halts CBDC Initiative While Promoting Domestic Stablecoins
South Korea has paused its central bank digital currency (CBDC) project while shifting focus to promote domestic stablecoins. The Bank of Korea halted the second phase of its CBDC pilot due to concerns over costs and regulatory readiness. Meanwhile, the new administration is encouraging the issuance of won-denominated stablecoins under the Digital Asset Basic Act, aiming to support over 18 million crypto traders in the country.
In Hong Kong, a new regulatory framework for stablecoin issuance will take effect on August 1, 2025. The Stablecoins Ordinance mandates licensing by the Hong Kong Monetary Authority (HKMA) for fiat-referenced stablecoin issuers, with strict requirements on reserve holdings and anti-money laundering protocols. This initiative aligns with China's strategy to reduce dependence on the U.S. dollar and enhance cross-border trade efficiency.
Key Points
- South Korea halts CBDC pilot to review costs and regulations.
- Focus shifts to promoting stablecoins for local crypto trading.
- Hong Kong's Stablecoins Ordinance starts August 1, 2025.
- Licensing requirements include reserve management and compliance protocols.
- Both regions aim to balance private innovation with monetary control.
The moves signal a strategic adaptation in both countries, emphasizing regulated stablecoin models over uncertain CBDC deployments.