South Korea Tests Digital Won at Scale as Central Bank Eyes AI-Driven Payments for 2026
The Bank of Korea's second phase of Project Hangang is no longer a controlled experiment. Launched in March 2026, the expanded pilot now includes nine commercial banks - Kyongnam Bank and iM Bank joining the original seven - operating a system where the central bank issues wholesale CBDC to lenders, which then distribute deposit tokens directly to consumers.
Key Takeaways
- South Korea’s central bank expanded its digital won pilot to nine banks, adding P2P transfers and AI-agent payment capabilities in Phase 2.
- The corporate crypto investment ban is being lifted, and capital gains tax has been deferred to 2027.
- A proposed 20% ownership cap on exchange shareholders faces heavy pushback, forcing massive divestments across the industry.
- The Digital Asset Basic Act remains delayed over stablecoin issuance disputes.
Phase 1, running from October 2023 through August 2025, generated 114,880 transactions across 81,000 participants. That’s fewer than two per person over nearly two years. Adoption was hampered by friction users found unacceptable next to existing card infrastructure.
Phase 2 responds directly to that failure. As reported by CoinDesk, it introduces auto-recharge, biometric authentication, peer-to-peer transfers, and government subsidy disbursements – including EV charging infrastructure payments – routed through digital won. Large-scale live transaction testing is set for late 2026. Most notably, the BOK is exploring AI agents capable of executing automated purchases and payment settlements in digital currency, laying groundwork for machine-to-machine economic activity settled in sovereign money.
Technical challenges remain. Earlier simulations revealed blockchain scaling and privacy issues, and real-time processing under peak load is still under investigation. Regulatory clarity is also incomplete – the Digital Asset Basic Act, which would govern stablecoins, remains delayed due to institutional disputes over issuance authority.
Digital Asset Regulation
South Korea’s crypto regulation runs on two tracks, with only the first fully active.
The Virtual Asset User Protection Act, in effect since July 2024, requires exchanges to store 80% of user funds in cold wallets, maintain insurance reserves, and prohibits insider trading and market manipulation under criminal penalty.
The second phase – the Digital Asset Basic Act – targets a 2026 finalization. It introduces a stablecoin model requiring banks to hold at least 51% equity in any stablecoin issuer, “no-fault liability” for operators regardless of proven negligence, and explicit regulation of ICOs and token listings.
Institutional access is expanding rapidly. The FSC announced plans to lift a near-decade-long ban on corporate crypto investment in early 2026, potentially allowing listed companies to allocate up to 5% of equity capital to top-20 cryptocurrencies. The 20% capital gains tax has been deferred again – now to January 2027 – with a KRW 50 million exemption threshold. AML enforcement tightens in parallel: the Financial Intelligence Unit gains expanded powers in 2026 to immediately suspend accounts linked to serious crimes.
South Korea’s New Proposal to Cap Exchange Holders
The government’s proposal to cap major exchange shareholders at 20% ownership is a forced restructuring of an industry built around founder control.
The ruling party and government have reached a preliminary agreement to include the cap in the Digital Asset Basic Act, framing exchanges as core financial infrastructure. The FSC could allow stakes up to 34% in specific circumstances. Established exchanges get a three-year compliance window; smaller players may receive six.
The ownership data explains the alarm. Korbit sits at 92.1% concentrated ownership following its Mirae Asset acquisition. Bithumb Holdings controls 73.6% of Bithumb. Gopax is 67.5% owned by Binance. Coinone stands at 53.4%. Even Upbit – the market leader – would need to shed 5 to 10 percentage points to comply.
The Digital Asset Exchange Alliance has called the caps “unprecedented,” arguing they violate private property rights and threaten industry growth. Analysts warn of governance vacuums as founder-controlled platforms face forced divestment, and the proposed Dunamu-Naver Financial merger is already complicated by the restructuring both entities would face. Minority investors are watching closely – sustained sell-offs over three to six years carry real downward pressure on exchange valuations with no obvious domestic precedent.
South Korea is simultaneously piloting sovereign digital currency, building a comprehensive regulatory framework, and dismantling concentrated exchange ownership – at a pace few jurisdictions have attempted. The second half of 2026 will test whether execution matches ambition.
The information provided in this article is for educational purposes only and does not constitute financial, investment, or trading advice. Coindoo.com does not endorse or recommend any specific investment strategy or cryptocurrency. Always conduct your own research and consult with a licensed financial advisor before making any investment decisions.
Alex is an experienced financial journalist and cryptocurrency enthusiast. With over 8 years of experience covering the crypto, blockchain, and fintech industries, he is well-versed in the complex and ever-evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His approach allows him to break down complex ideas into accessible and in-depth content. Follow his publications to stay up to date with the most important trends and topics.
