South Korea just torched its $26 million digital won project after banks basically said “thanks, but no thanks” to the government’s CBDC dreams. Seven major banks tested the wholesale CBDCs during “Project Han River” but refused to move forward with phase two, even when offered cost-sharing deals. Now those same banks are forming their own stablecoin consortium, targeting a won-backed launch by 2026. Turns out private profit beats state control every time, and there’s more brewing beneath this digital currency drama.
While South Korea’s central bank was busy pouring $26 million into its digital won project, the country’s commercial banks were apparently doing math of their own. Turns out, the numbers didn’t add up.
The Bank of Korea has officially suspended its CBDC program after completing the first phase of “Project Han River.” Seven banks participated in testing wholesale CBDCs and retail tokenized deposits. Then they basically said thanks, but no thanks to phase two.
The central bank even offered to split costs for the next round. The banks still walked away. That’s when you know something’s really broken.
Here’s the kicker: those same banks that ditched the CBDC are now forming their own stablecoin consortium. Eight major players including KB Kookmin, Shinhan, Woori, and NongHyup are targeting a won-backed stablecoin launch by 2026.
Why the sudden change of heart? Money talks. Banks see actual commercial opportunities with stablecoins, unlike CBDCs which offered murky profit prospects and sky-high costs. Similar to Ripple’s legal victory, this shift demonstrates the private sector’s growing influence in digital asset regulation.
President Lee Jae Myung has been pushing stablecoin acceptance since taking office. The timing isn’t coincidental. Under the proposed Digital Asset Basic Act, companies need just 500 million won in equity to issue stablecoins. That’s roughly $370,000, pocket change compared to CBDC development costs.
The market reaction tells the whole story. Fintech stocks like KakaoPay dropped on the CBDC news. Meanwhile, consortium banks saw modest gains. Investors aren’t stupid, they follow the money trail.
South Korea’s regulatory approach favors public-private collaboration over state-controlled digital currency. The Korea Financial Telecommunications and Clearings Institute is backing the bank consortium, signaling official support for private stablecoin initiatives. The proposed framework includes reserve management requirements to ensure stablecoin stability and user protection. The Bank for International Settlements has raised concerns about stablecoins lacking price stability compared to traditional money.
The CBDC suspension represents more than just a failed pilot program. It’s a fundamental shift in digital currency strategy. Banks cited lack of clear commercialization pathways as a primary concern. Translation: we can’t figure out how to make money from this thing.
The stablecoin revolution offers something CBDCs couldn’t deliver, flexible business models with actual profit potential. Sometimes the private sector just does it better.
