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- Bank of Korea is prioritizing CBDCs and deposit tokens over private stablecoins.
- Project Hangang will expand real-world testing of digital currency systems.
- Won-based stablecoins remain small but strategically important.
South Korea is sharpening its focus on digital money. In his first address as governor of the Bank of Korea, Shin Hyun-song made it clear that central bank digital currencies (CBDCs) and bank-issued deposit tokens will sit at the core of the country’s financial future. His remarks point to a strategic pivot that could reshape how the Korean won functions in an increasingly digital economy.
Shin framed the initiative as a necessary step in preparing for a new monetary system, with expanded testing already underway through Project Hangang.
Project Hangang Enters Next Phase
Launched in early 2026, Project Hangang is South Korea’s testing ground for digital currency infrastructure. The second phase will focus on improving real-world use cases for both CBDCs and deposit tokens—digital assets issued by commercial banks for institutional transactions.
CBDCs, as digital versions of fiat currency issued by central banks, give policymakers tighter control over money supply and payment systems. Deposit tokens, meanwhile, operate similarly to stablecoins but remain within the regulated banking system.
According to Shin, combining these tools could strengthen the global competitiveness of the Korean won in digital payments and cross-border finance.
Stablecoins Left Out of the Conversation
Notably absent from the governor’s speech was any strong endorsement of privately issued stablecoins. This omission stands out given the recent push for won-backed stablecoins aimed at reducing reliance on dominant players like Tether (USDT) and USD Coin (USDC).
Shin’s background at the Bank for International Settlements may offer a clue. The BIS has consistently warned about the risks stablecoins pose to financial stability, including liquidity concerns and regulatory gaps.
Still, market interest in Korean won stablecoins is growing. Proponents argue they could reduce the “Kimchi Premium”—a persistent gap where crypto assets trade at higher prices locally than on global exchanges.
A Small but Strategic Stablecoin Market
Despite the rising attention, South Korea’s won-based stablecoin sector remains modest. Supply currently sits at around $1.3 million, led by Frax Finance (KWRQ). This is tiny compared to the global stablecoin market, which exceeds $320 billion.
Also Read: South Korea Is About to Pay Government Bills with Blockchain. Here’s What That Means.
However, South Korea plays an outsized role in digital payments, accounting for roughly 60% of global stablecoin transaction corridors. That influence gives regulators significant leverage in shaping the future of digital finance.
Shin Hyun-song’s early stance signals a controlled, institution-led approach to digital currency adoption. By prioritizing CBDCs and bank-issued tokens over private stablecoins, South Korea appears to be balancing innovation with financial stability. As Project Hangang progresses, the country could emerge as a key testing ground for how governments integrate digital assets into mainstream finance—without fully handing control to the private sector.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.
