South Korea’s financial regulator has given the green light for the second phase of the Bank of Korea’s central bank digital currency deposit-token project, expanding its scale and adding new functions.
The Financial Services Commission said on July 15 that it designated Project Hangang Phase 2 as an innovative financial service, along with four other services. The move clears the way for a much larger test: the number of deposit-token users will jump to 500,000 from a previous cap of 100,000.
Two new banks join the project. BNK Kyongnam Bank and iM Bank will now offer deposit-token-based payment and settlement services. The FSC also revised the designations for seven banks that participated in Phase 1 – KB Kookmin Bank, Shinhan Bank, Woori Bank, Hana Bank, NH NongHyup Bank, Industrial Bank of Korea and Busan Bank – keeping them in the expanded pilot.
Phase 2 broadens where the tokens can be used. Merchants that already accept them will be joined by small business owners and large companies. The test also adds wallet-to-wallet transfers and a pilot program for treasury fund disbursements – a move into public-sector use of distributed ledger technology.
Convenience features are being introduced. Automatic conversion for deposits and withdrawals, biometric authentication, higher holding and transfer limits, non-face-to-face electronic wallet opening for businesses, and cash receipt issuance will all be part of the test environment.
The FSC said the second phase aims to evaluate whether distributed ledger technology can simplify settlement procedures, reduce post-verification costs, and help prevent fraudulent claims, especially in areas like government fund disbursement. Smart contracts will be examined for their potential to automate such processes.
The expansion indicates that South Korea is pressing ahead with its CBDC pilot at a time when many central banks are still in early exploration stages. With half a million users and a wider merchant base, the real-world data from Phase 2 could shape the BOK’s decisions on a full-scale launch.
The next milestone to watch: results from the treasury disbursement pilot and any adjustments to the regulatory framework based on the test outcomes.
South Korea expands Bank of Korea digital currency trial to 500,000 users with new features
South Korea’s financial regulator approved a larger test of the Bank of Korea’s digital deposit token, increasing users from 100,000 to 500,000 and adding two banks and new payment options. This affects businesses and public agencies by enabling easier digital payments and fund transfers in the expanded pilot.