South Korea Central Bank to Accelerate Plans for CBDC Usability Testing

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The Central Bank of Korea has announced plans to accelerate its Central Bank Digital Currency (CBDC) initiative and conduct a trial run of the digital Korean currency (KRW) involving around 100,000 citizens this year. As stated in recent reports, the primary goal is to evaluate functionality and deposits as the project progresses further.

South Korea to Test CBDC by Programming Deposit Tokens

A recent article from a nearby news source highlights growing curiosity towards South Korea’s CBDC, specifically concerning the impact on financial institutions based there. In Q4 2024, the Bank of Korea plans to distribute deposit and e-money tokens to around 100,000 individuals for a pilot project. The bank aims to assess the usefulness of the digital KRW by observing its application among everyday citizens. During this trial, the central bank will program the digital KRW. To facilitate testing, deposit tokens will be issued, acting as digital vouchers that can be utilized for designated purchases at specific retailers.

Last October, the Bank of Korea announced its plans for conducting usability tests. During this announcement, it was shared that the central bank intended to carry out the tests in collaboration with regulatory bodies such as the Financial Supervisory Service and the Financial Services Commission.

The Central Bank aims to make financial transactions as hassle-free as possible for citizens. Currently, people can move money and pay bills using online banking or cards. However, the Central Bank Digital Currency (CBDC) could further simplify this process, enabling direct fund transfers without the need for intermediaries or third parties. This streamlining results in lower transaction costs and increased efficiency. It’s also probable that the Bank of Korea will create a CBDC that works alongside existing financial institutions.

New CEX Rules

South Korea is intensifying its efforts in CBDC research while cracking down on cryptocurrency exchanges. Starting May, centralized crypto exchanges based in the country will face new regulations. These rules include a ban on listing tokens tied to exploits, except for those that have been thoroughly investigated and resolved. To be listed, exchanges must also provide whitepapers or technical manuals with detailed information, specifically for South Korean users. Exchanges are prohibited from trading tokens that don’t meet these conditions, although this may not apply to tokens that have been traded on licensed CEXs for over two years.

Under the new regulations, authorities have the ability to remove cryptocurrencies from lists that do not comply with certain requirements. Exchanges are expected to ensure issuers follow these rules and supply necessary token details. At present, South Korean regulatory bodies are gathering input from local crypto exchanges before enacting the changes.

In Q1 2023, there was a significant increase in cryptocurrency trading using the South Korean won instead of the US dollar. According to data from blockchain firm Kaiko, the Korean won became the most frequently used fiat currency in crypto trading during this period, with a total volume of approximately $456 billion. This surpassed the previous record of $455 billion, which was for trading with the US dollar.

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2024-04-17 15:06