South Korea’s People Power Party has said any rollout of a central bank digital currency should wait until lawmakers put legal safeguards in place on privacy, spending controls and consumer choice. The warning comes as the Bank of Korea continues expanding Project Hangang, its digital money testing program.
The debate has focused not only on whether a CBDC could improve payments, but also on how much control authorities or issuers might have over transactions. Opposition figures have questioned whether digital money could be traced too closely, limited to certain uses, or designed with conditions such as expiry rules.
Opposition raises questions over transaction control
People Power Party figures argued that gains in payment convenience and efficiency are not enough to justify moving ahead before core legal questions are settled. Jang said lawmakers first need clarity on how far authorities could track citizens’ transactions and whether users would keep meaningful control over how they spend digital money.
He also pointed to the possibility that programmable currency could restrict where funds are used or attach conditions to balances, including expiration dates. Another concern raised by the party is whether people would still be free to choose their preferred form of money if South Korea eventually introduces a CBDC.
Project Hangang uses bank-issued deposit tokens
According to Bank of Korea materials, Project Hangang is built around an institutional, or wholesale, CBDC rather than direct public accounts at the central bank. In this structure, financial institutions use the central-bank component, while consumers handle deposit tokens issued by commercial banks.
That distinction matters because a retail CBDC would normally be a direct claim on the central bank for general public use. Under Project Hangang, the consumer-facing tokens remain tied to deposits held at participating banks instead. During the first phase, users converted bank money into deposit tokens through participating banks’ mobile apps and then spent those tokens via QR-code payments at approved merchants.
Pilot expands in second phase
The first public test ran from April to June 2025 and allowed up to 100,000 adults to apply, with seven banks taking part. The Bank of Korea then formally announced the second phase of Project Hangang on March 18, 2026.
The next stage expands participation to nine banks by adding BNK Kyongnam Bank and iM Bank. It also introduces peer-to-peer transfers, biometric authentication and automated movement between deposits and token wallets. The pilot could raise the number of wallets from 100,000 to as many as 500,000.
Public-sector uses being examined include government subsidies, support for electric-vehicle charging and operational spending by government bodies. The tests are intended to assess whether programmable payments can apply conditions attached to specific grants or vouchers.
No issuance decision has been announced
Bank of Korea Governor Shin Hyun-song has supported continued work on CBDCs and deposit tokens, while saying the central bank will protect payment and settlement stability. Public documents cited in the project do not set a deadline for issuance and do not confirm that consumers would receive direct retail accounts at the Bank of Korea.
The central bank has also said it is still researching privacy technology and offline payment features for a possible general-purpose CBDC. For now, the confirmed next step is further testing of expanded deposit-token functions in 2026. There has been no announcement that Project Hangang will automatically lead to a nationwide rollout.
Source: crypto.news