South Korea is about to issue a soft pilot of bank-issued stablecoins. This will be a significant step in the direction of adopting the digital currency in its financial system. This is led by the Bank of Korea (BOK) and the Financial Services Commission (FSC)
In contrast to a complete central bank digital currency (CBDC), the pilot centers on tokenized deposits. Banks will issue digital currencies in a 1-to-1 reserve of fiat currencies. These stablecoins will facilitate regulated transactions such as government aid, transport fares, and online shopping.
Banks and blockchain take the lead.
Top South Korean banks, such as Kookmin, Shinhan, Hana, and Woori, will issue and hold stablecoins. The government will regulate them to ensure their security and compliance.
The stablecoins will have programmable features. For example, one can assume that the government introduces time-sensitive subsidies or location-specific use regulations. Therefore, such functionalities will be based on conditions under smart contracts.
It will be a permissioned blockchain system compatible with both Klaytn and Ethereum networks. This arrangement allows for scalability, anonymity, and control, making it suitable for the public sector’s needs.
Furthermore, Know-Your-Customer (KYC) and strong identity checks will be implemented. The Korea Internet & Security Agency (KISA) will aid in implementing anti-money laundering (AML) regulations. Such safeguards are essential in terms of trust and abuse.
Step-by-step rollout with big ambitions
The legal framework uses the Digital Assets Basic Act (DABA). It must be audited monthly, clearly reported, and maintain a substantial reserve. The sandbox model enables banks to run features in a restricted environment.
The release will begin with a prototype at the end of 2025, followed by a public test in early 2026. Project expansion across the country will depend on a final review by the end of 2026. South Korea’s model combines state control and market entrepreneurship. If successful, it may affect digital finance policy in Asia and provide a proven model to follow worldwide.
