The Bank of Korea (BOK) is advancing plans to issue deposit-backed digital tokens on public blockchain networks, signaling a significant step toward modernizing the country’s financial infrastructure. According to recent remarks by Deputy Governor Lee Jong-ryeol at the "Blockchain Leaders Club" event, the central bank is actively studying how to integrate central bank digital currency (CBDC) frameworks with open, decentralized networks.
This initiative aims to develop a state-issued stablecoin—referred to as a "deposit-type token"—that would be fully backed by central bank reserves. Unlike privately issued stablecoins such as USDT or USDC, these tokens would be directly tied to the Korean won and regulated under national monetary policy, enhancing transparency and financial stability.
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A Strategic Move Toward Financial Sovereignty
South Korea has seen a surge in cryptocurrency outflows, with stablecoins accounting for 47% of all crypto transfers in Q1 2025. Of this, USD-pegged tokens like USDT and USDC represented approximately 26.87 trillion KRW (~$19.1 billion). This growing reliance on foreign-issued digital assets has raised concerns about capital flight and monetary sovereignty.
In response, political leaders including opposition figure Lee Jae-myung have advocated for a Korean won-backed stablecoin to reduce dependency on private U.S.-dollar-pegged alternatives. The proposed digital token could help curb an estimated 56.8 trillion KRW (~$40.3 billion) in annual cryptocurrency outflows, reinforcing domestic liquidity and regulatory oversight.
By leveraging public blockchains—transparent, permissionless networks accessible to all—the Bank of Korea aims to combine decentralization benefits with institutional trust. Such a hybrid model would allow real-time settlement, lower transaction costs, and broader financial inclusion while maintaining compliance through regulated access points.
Why Public Blockchains Matter for CBDCs
Traditionally, many central banks have experimented with private or permissioned ledgers for their CBDC projects. However, South Korea’s interest in public blockchain integration marks a shift toward openness and interoperability.
Public blockchains offer several advantages:
- Transparency: All transactions are verifiable by anyone, reducing fraud risks.
- Resilience: Decentralized networks are less vulnerable to single points of failure.
- Innovation: Developers can build applications (dApps) on top of the network, fostering new financial services.
- Global Reach: Facilitates cross-border payments without relying on correspondent banking systems.
However, challenges remain—particularly around privacy, scalability, and regulatory compliance. The BOK will need to balance openness with controls, possibly through identity-verified wallets or tiered access models.
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Global Context: Stablecoins and Monetary Policy
South Korea’s move reflects a broader global trend where central banks are reevaluating their stance on digital currencies amid rising stablecoin adoption. In the U.S., strong economic data—including robust June non-farm payroll figures—has dampened expectations for a July rate cut by the Federal Reserve. As a result, the 10-year Treasury yield climbed to 4.35%, supporting a rally in equities: the Dow rose 0.77%, S&P 500 gained 0.83% to close at 6,279, and the Nasdaq surged 1.02% to 20,601, hitting record highs.
Meanwhile, gold prices dropped 1% on July 3rd as higher yields reduced the appeal of non-yielding assets. FXStreet analyst Valeria Bednarik noted that the technical outlook for gold turned bearish following the strong labor market data.
In foreign exchange markets, the GBP/JPY pair rose amid improved risk sentiment fueled by resilient U.S. economic performance, putting pressure on traditional safe-haven currencies like the Japanese yen. Over the first half of 2025, USD/JPY declined by 9%, marking one of its strongest performances in recent years.
Bitcoin Nears All-Time High Amid Market Optimism
Digital asset markets also showed strength, with Bitcoin (BTC) surpassing $110,000** on July 4th, peaking at **$110,529 before pulling back slightly to $109,483** at press time. This brings BTC within just **$1,000 of its all-time high of $120,000, reigniting investor interest.
Despite brief bearish sentiment after breaking key resistance levels, many analysts believe the momentum could propel Bitcoin to new highs. Increased institutional adoption, macroeconomic uncertainty, and limited supply continue to support long-term bullish narratives.
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Core Keywords
- Central Bank Digital Currency (CBDC)
- Deposit-type token
- Public blockchain
- Stablecoin
- Bank of Korea
- Digital won
- Blockchain integration
- Cryptocurrency outflow
Frequently Asked Questions (FAQ)
Q: What is a deposit-type token?
A: A deposit-type token is a digital representation of central bank reserves, functioning similarly to a stablecoin but issued directly by a central bank. It is designed to be used within a CBDC framework and backed 1:1 by fiat currency.
Q: How is this different from existing stablecoins like USDT or USDC?
A: While both are stablecoins pegged to fiat, deposit-type tokens would be issued by the central bank itself rather than private companies. This enhances trust, regulatory oversight, and alignment with national monetary policy.
Q: Why use public blockchains for a government-issued currency?
A: Public blockchains offer transparency, security, and innovation potential. By using them, the Bank of Korea can enable faster settlements, reduce infrastructure costs, and promote financial inclusion while maintaining control through regulated interfaces.
Q: Will this replace cash or traditional banking?
A: Not immediately. The goal is to complement existing systems by offering a more efficient, programmable form of digital currency. Cash and traditional accounts will likely coexist for years.
Q: When will South Korea launch its digital won?
A: There is no official launch date yet. The Bank of Korea is still in the research and testing phase, with pilot programs expected in late 2025 or 2026.
Q: Could this help stop capital outflows?
A: Potentially yes. By providing a trusted, domestically issued digital alternative to foreign stablecoins, the BOK aims to retain liquidity within Korea’s financial system and reduce reliance on offshore crypto markets.
As central banks worldwide navigate the digital currency landscape, South Korea’s exploration of public blockchain-based deposit tokens positions it at the forefront of financial innovation—balancing technological advancement with monetary stability and national interest.