Bank of Korea CBDC Pilot Jumps to 500,000 Users in Phase 2

South Korea's central bank ran a CBDC pilot for three months last year. Eighty-one thousand people opened wallets. Only 42% actually spent anything.

The next phase starts in September – nine banks, up to 500,000 users, and real government money this time.

The Bank of Korea announced the expansion of Project Hangang on Monday, per a Yonhap News Agency report. "From the second phase, we will lay the groundwork for commercialization," a Bank of Korea official told Yonhap.

Phase 1 ran from April to June 2025 with seven banks and 12,000 merchants producing 114,880 transactions. Banks had collectively put up around 30–35 billion won building the infrastructure for that result, according to a review by the HRF CBDC tracker.

Phase 2 addresses the engagement problem with features that resemble actual banking. New functionality includes biometric fingerprint approvals, person-to-person wallet transfers, automatic top-ups (your linked bank account converts funds into deposit tokens when the balance runs low), recurring auto-payments, cash receipt generation, and interest payments. For the first time, the pilot will also test government subsidy disbursements using programmable tokens.

The Bank of Korea issues a wholesale CBDC – a digital currency used only between financial institutions to settle transactions behind the scenes. Commercial banks then create deposit tokens that consumers use for payments. Kim Dong-seop, head of the bank's Digital Currency Planning Team, called the design "a middle ground between a CBDC and a stablecoin."

That architecture could eventually mean receiving government benefits directly into a digital wallet instead of waiting for a voucher or a check. For small businesses, the test will measure whether deposit token payments can undercut the interchange fees that card networks charge on every transaction.

Phase 2 will run programmable deposit tokens with spending rules baked in: funds locked to permitted purposes, vendors, and time windows, replacing manual audits and cutting fraud at the point of disbursement. This gives the Bank of Korea broader control over how citizens spend money given for a specific purpose.

Joining the original seven banks – KB Kookmin, Shinhan, Hana, Woori, Nonghyup, Industrial Bank of Korea, and BNK Busan – are Gyeongnam Bank and iM Bank. The pilot will run open-ended rather than with a fixed close date.

South Korea's new Bank of Korea Governor, Shin Hyun-song, made Project Hangang a centerpiece of his first policy address after taking office in April 2026. Hana Bank has started designing systems for a won-backed stablecoin ahead of legislation that has been debated in Seoul since mid-2025. The Ministry of Economy and Finance has also announced plans to update a 76-year-old national asset law to classify cryptocurrencies as national assets.

The same programmability that makes deposit tokens attractive to regulators is what worries critics. Rules that lock government funds to specific vendors can be extended beyond subsidies – expiring balances, spending category restrictions, or wallet freezes without a court order. Unlike cash, every CBDC transaction is logged on a ledger the central bank can read.

China's digital yuan has already been rolled out with expiry dates on certain stimulus payments. Beijing frames it as anti-hoarding policy; critics call it financial coercion. Researchers at Lawfare have warned the e-CNY could set a global precedent for state-controlled financial surveillance.

The United States is heading the other direction. The four-year ban on CBDC issuance became law on July 11. The 21st Century ROAD to Housing Act took effect without President Donald Trump's signature when the constitutional 10-day window expired, after Trump declined to sign it over unrelated demands on voting legislation.