South Korea’s central bank is preparing a larger second stage of its digital currency trial, broadening both the number of participating banks and the functions available to users. The Bank of Korea says Phase 2 of Project Hangang will begin in September, with a user cap of 500,000 and live testing of deposit-token payments.
Phase 1 results
The first phase ran from April to June 2025. According to the reported figures, 81,000 people opened wallets during the three-month test, while 114,880 transactions were recorded across 12,000 merchants. Seven banks took part in that phase.
The pilot showed early consumer uptake, but engagement was limited. The source article said only 42% of wallet holders actually spent anything. Banks were also reported to have invested around 30 billion to 35 billion won collectively to build the infrastructure used in the first round.
Broader rollout in Phase 2
The next stage will expand participation from seven banks to nine. The original group included KB Kookmin, Shinhan, Hana, Woori, Nonghyup, Industrial Bank of Korea and BNK Busan. Gyeongnam Bank and iM Bank are being added for the new phase.
Unlike the first stage, the new pilot is described as open-ended rather than tied to a fixed closing date. A Bank of Korea official told Yonhap News Agency that the second phase is intended to “lay the groundwork for commercialization.”
New functions in the test include biometric fingerprint authentication, person-to-person wallet transfers, automatic top-ups from linked bank accounts, recurring auto-payments, cash receipt generation and interest payments. The pilot will also, for the first time, include government subsidy disbursements using programmable tokens.
How the system works
Under the model described in the report, the Bank of Korea issues a wholesale CBDC used only between financial institutions for settlement. Consumers do not directly hold that central bank digital currency. Instead, commercial banks issue deposit tokens, described as a blockchain-based form of ordinary bank deposits, for use by consumers and merchants in day-to-day payments.
Kim Dong-seop, head of the central bank’s Digital Currency Planning Team, described that arrangement as “a middle ground between a CBDC and a stablecoin,” according to the source article.
The second phase will test programmable deposit tokens with spending rules attached, including limits tied to permitted uses, vendors and time windows. The article said this structure is intended to reduce manual auditing and curb fraud when government funds are disbursed.
Wider policy backdrop
Project Hangang has gained visibility under Bank of Korea Governor Shin Hyun-song, who reportedly made it a central part of his first policy address after taking office in April 2026. The source article also noted that Hana Bank has started designing systems for a won-backed stablecoin as debate over private digital won tokens continues in Seoul.
The Ministry of Economy and Finance has separately announced plans to revise a 76-year-old national asset law so cryptocurrencies would be classified as national assets, according to the report.
The expansion of the pilot comes as South Korea continues to test how a wholesale CBDC and bank-issued deposit tokens could be used in practical payments, while also moving toward more sensitive applications such as subsidy distribution.
Source: decrypt.co