South Korea pressed pause on its central bank digital currency (CBDC) initiative, even as its new government pivoted toward promoting domestic stablecoins.
Telling banks involved that introducing won-denominated stablecoins would be ‘desirable,’ South Korea’s central bank has slowed down on any progress towards a CBDC.
In the meantime, Hong Kong is rolling out a regulatory framework for stablecoin issuance aimed at challenging U.S. dollar dominance and bolstering its own financial infrastructure.
Both countries reinforce a common perception: crypto is here to stay, and you’ll need a top-notch crypto wallet like Best Wallet app to keep on top of everything.
South Korea: Cold Feet on CBDC, but Full Speed Ahead on Stablecoins
In a surprise move, the Bank of Korea halted the second phase of its CBDC pilot, planned for later this year, for further review.
The advanced pilot, involving peer-to-peer transfers and merchant payments, takes a back seat amid rising concern over cost, commercialization ambiguity, and regulatory readiness.
This policy change is strongly influenced by President Lee Jae‑myung’s administration, which won elections earlier in June based at least partly on crypto promises.
The new administration also fostered a regulatory framework enabling firms with modest capital (₩500 million ~ US$370K) to issue stablecoins under the Digital Asset Basic Act.
At a time when over a third of South Korea’s population – roughly 18M people – trade crypto, boosting stablecoins seems like a solid move.
The decision to move away from a CBDC is a bit more surprising. Still, with so many investors trading crypto daily, there’s a real desire to build and strengthen frameworks like the ones for stablecoins.
Other countries are making similar moves, though perhaps for more political reasons.
Hong Kong: Regulating Stablecoins to Reduce U.S. Dollar Dependence
Hong Kong is set to enforce its Stablecoins Ordinance starting August 1, 2025. Passed on May 21, the law mandates HKMA licensing for any fiat-referenced stablecoin issuer targeting the city’s residents.
The rigorous licensing requirements cover reserve holdings, fund segregation, redemption rights, and anti-money-laundering protocols.
Hong Kong Financial Secretary Paul Chan ties the initiative to China’s broader de‑dollarization strategy, highlighting stablecoins as pivotal for trade and cross-border payments in local currencies. In his words:
‘Fintech has great potential in the application of cross-border trade, and the goal is to solve the long-standing pain points of slow and high cost of cross-border payment, and better serve the real economy in the field of payment… stablecoins are a cost-effective alternative to the traditional financial system and have the potential to revolutionize payments and capital market activities, including cross-border payments. The stablecoin legislation will… encourage issuers to extend the application of stablecoins to different scenarios, and help solve the real pain points of enterprises in business and people’s lives.’
Hong Kong anticipates local issuers and regulated institutions taking the lead, with limited retail uptake initially, but significant promise for cross-border institutional use.
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What These Moves Signal
Both governments seek to balance private stablecoin innovation with preserving monetary policy control.
South Korea’s pivot reflects a pragmatic approach: redirecting momentum from costly and uncertain CBDC deployment toward a more agile, regulated stablecoin model.
Hong Kong’s strategy signifies a calculated expansion of its role in the global digital asset economy, linking stablecoin issuance to monetary liberalization and regional trade objectives, and supporting China’s broader political goals.
In each case, the success of stablecoin ambitions hinges on the dirty details of regulation, institutional participation, and financial market dynamics. And success means that everyone, not just major institutions, will want their own Web3 wallet.
As always, do your own research – this isn’t financial advice.
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