Bank of Korea won’t issue stablecoins: Here’s why

The Bank of Korea has ruled out directly operating stablecoin businesses, with Governor Hyun Song Shin telling lawmakers on October 12 that private companies should handle their issuance and operations while the central bank continues developing its institutional digital currency system.

• Bank of Korea Governor Hyun Song Shin said private companies should operate stablecoins, not banks themselves.
• During October 12 parliamentary testimony, Shin distinguished private stablecoins from the central bank's Hangang project.
• Project Hangang combines institutional digital currency with deposit tokens issued and managed by commercial banks.
• Shin said South Korea's central bank has not considered general purpose retail CBDCs since 2023.
• Bank of Korea maintains responsibility for interbank settlement while commercial banks manage customer information directly.

During a parliamentary audit held at the Bank of Korea headquarters in Seoul, Shin said private businesses were the appropriate operators of stablecoins, while the central bank would continue providing input on monetary stability and payment systems. The governor made the remarks while responding to questions from independent lawmaker Lee Jun-seok about stablecoins, bank deposit tokens and central bank digital currencies (CBDCs). He distinguished privately operated stablecoins from Project Hangang, the central bank's ongoing initiative involving institutional digital currency and commercial bank-issued deposit tokens.

At the October 12 parliamentary hearing, Shin explained that stablecoins should be operated by private companies because they are designed to circulate through decentralized blockchain networks. He described their purpose as allowing digital tokens to move independently of central bank currency on permissionless blockchain systems. However, the governor maintained that the Bank of Korea would retain a role in discussions concerning the country's monetary system.

Shin stated that "it is right for stablecoins to be handled by the private sector", according to the supplied account of his parliamentary remarks. He explained that the Bank of Korea would not directly operate stablecoin businesses but would express its views on matters affecting the monetary ecosystem. The statement addressed the division of responsibilities between the central bank and private companies, without announcing any new stablecoin licensing rules.

The governor's comments followed months of debate over how South Korea should regulate stablecoins denominated in the Korean won. In July, the Bank of Korea reaffirmed its preference for bank-led consortiums during the initial introduction of won-backed stablecoins, according to earlier coverage of its stablecoin policy. The central bank had expressed concerns about allowing nonbank companies to issue such assets without appropriate financial safeguards.

That earlier position focused on which private institutions should be permitted to issue stablecoins. Shin's October 12 remarks concerned whether the central bank itself should participate in operating stablecoin businesses. The governor did not announce that the Bank of Korea had withdrawn its earlier preference for bank-led issuance, and the supplied parliamentary account did not establish any change to South Korea's pending stablecoin legislation.

Meanwhile, private financial institutions have continued preparing blockchain-based payment services. In September, Eugene Investment & Securities signed an agreement with blockchain company BEATOZ to test stablecoin settlement for tokenized securities subscriptions, as reported in coverage of the planned system. The companies intend to examine whether subscription, payment and settlement can be completed through a single blockchain-based process.

Project Hangang will remain separate from private stablecoins

Shin emphasized that Project Hangang serves a different purpose from privately issued stablecoins. The initiative uses institutional digital currency and bank-issued deposit tokens to reproduce South Korea's existing two-tier monetary system using blockchain technology. Under that arrangement, the Bank of Korea handles settlement between financial institutions, while commercial banks continue maintaining customer accounts and deposits.

According to the governor, Project Hangang is designed to tokenize the existing financial system without changing the responsibilities assigned to the central bank and commercial lenders. The Bank of Korea's institutional digital currency is used for transactions between participating institutions, while deposit tokens represent commercial bank deposits that customers can use for payments. Shin explained that the system preserves the existing relationship between banks and their customers.

The central bank's official Project Hangang research, published in December 2025, describes a unified ledger connecting wholesale CBDCs with tokenized commercial bank deposits. The framework allows participating banks to issue deposit tokens while using central bank digital currency for settlement. The Bank of Korea said the design was intended to test payment services within the country's existing monetary structure.

During the October 12 hearing, Shin addressed concerns that the project could allow the central bank to monitor individuals' financial transactions. He said customer information would remain with commercial banks, while the Bank of Korea would handle interbank settlement. The governor maintained that the project included safeguards intended to protect users' personal information and prevent unauthorized access.

The Bank of Korea provided further details in an October 8 explanation of Project Hangang, which distinguished institutional digital currency from a general-purpose CBDC. The publication explained that the central bank and participating banks were preparing additional payment trials involving deposit tokens. It identified an electric vehicle charging infrastructure subsidy program as one application and described preparations for further consumer testing later in 2026.

South Korea has not considered a retail CBDC since 2023

Alongside the stablecoin discussion, Shin clarified that the Bank of Korea was not pursuing a universal CBDC intended for direct public use. The governor said the institution had previously considered developing a general-purpose digital currency but stopped reviewing that approach in 2023. His remarks distinguished a centrally issued retail CBDC from the institutional settlement infrastructure being tested through Project Hangang.

Shin stated that "the Bank of Korea has not been considering a general-purpose CBDC since 2023," according to the parliamentary account. The governor explained that the current project focuses on institutional digital currency and deposit tokens issued through commercial banks. The arrangement allows individuals to use participating banks' digital payment services without

Project Hangang has already undergone public payment testing. In 2025, the Bank of Korea conducted an initial pilot involving seven commercial banks and participating merchants. Its pilot documentation described how customers could convert bank deposits into digital deposit tokens through banking applications and use them for purchases at participating stores and online businesses. The trial included convenience stores, supermarkets, coffee shops and online shopping services.

The central bank later expanded the project to include further payment applications and government-related transactions. As previously reported, the second phase of Project Hangang involved nine participating banks and introduced plans to test government subsidy payments using deposit tokens. The expansion included proposed features such as biometric authorization, wallet transfers between users and automatic balance top-ups.

According to the Bank of Korea's March 2026 monetary policy report, the institution was preparing additional live transactions while examining how deposit tokens could support government payment programs. The report discussed potential applications involving electric vehicle charging infrastructure and programmable government disbursements. It stated that the central bank was coordinating with participating institutions to improve the system based on results from the first trial.

Private companies continue testing stablecoin payments

South Korea's private financial sector has continued developing stablecoin products while lawmakers consider the rules governing their issuance and use. The Bank of Korea's July policy position supported a cautious approach centered on bank participation, while private companies have announced partnerships involving payments, securities settlement and cross-border transactions.

In July, HashKey Group signed a memorandum of understanding with Kbank and blockchain company BPMG to examine won-backed stablecoins for international payments and trade settlement. As covered in the announcement, the companies agreed to assess the commercial and regulatory requirements for blockchain-based payment infrastructure. Kbank was assigned responsibility for reviewing banking compliance and feasibility, while BPMG would examine the technology supporting stablecoin transactions.

Another initiative involved payments company MoonPay, which launched its South Korean business in September. The company announced plans to work with Woori Bank, KB Financial Group and KakaoBank on stablecoin-related services and international payments. Its South Korean expansion plans included preparing overseas distribution channels for won-denominated stablecoins if the assets are issued under the country's developing regulatory framework.

The Bank of Korea, meanwhile, has continued developing Project Hangang through institutional partnerships. Its October 8 update stated that preparations were underway for another round of consumer payment testing before the end of 2026. The planned trials will involve deposit tokens issued by participating banks, while the central bank's institutional digital currency will continue supporting the settlement framework.

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