South Korea's first central bank digital currency (CBDC) pilot ran without a formal, independent government security inspection. The finding comes from Financial Supervisory Service (FSS) dat
South Korea's first central bank digital currency (CBDC) pilot ran without a formal, independent government security inspection. The finding comes from Financial Supervisory Service (FSS) data disclosed to People Power Party lawmaker Lee Heon-seung and reported by Maeil Business (mk.co.kr).
The Bank of Korea carried out its CBDC pilot between April and June of the previous year. The pilot, called Project Hangang, involved 100,000 participants and seven major local banks, run in partnership with the Financial Services Commission and the FSS. The pilot did not undergo a formal, independent security audit. Instead, the participating banks relied on their own pre-test checks and self-assessments, and financial authorities conducted no separate inspection during the initial phase.
The Bank of Korea explained that the existing security checks were adequate and followed guidelines set by the Financial Supervisory Service.However, some observers believe that without an external third-party review, there are unresolved questions around independent validation, and the decision raises concerns about operational risks, cybersecurity readiness, and the overall credibility of governance for the CBDC initiative.
The scrutiny lands at a busy moment for South Korea's digital currency agenda. The Bank of Korea is preparing to launch Phase 2 of the CBDC pilot in September 2026, expanding to 500,000 users. Commercial banks will create deposit tokens, a blockchain-based version of the money already in a bank account, that consumers and merchants use for actual payments.Shin Hyun-son, named Bank of Korea Governor in April, used his first address in office to prioritize the CBDC and Bank of Korea-issued deposit tokens.
On the legislative front, talks that had been stalled for months appear to be moving again. On July 20, the ruling Democratic Party of Korea held a closed-door briefing with the Financial Services Commission at the National Assembly Members' Office Building in Yeouido, Seoul, agreeing to accelerate the Framework Act on Digital Assets, the Phase 2 legislation that would legalize and regulate won-denominated stablecoins.Seoul's ruling party and financial regulators agreed to convene the relevant subcommittee twice a month and reintroduce the bill in September 2026. The core dispute has been over who holds authority to oversee stablecoin issuance, a disagreement that has pitted the Financial Services Commission against the Bank of Korea for months.
The audit gap from Phase 1 is unlikely to go away quietly as the program scales up, public funds enter the picture, and regulators race to finalise the broader legal framework around it.
Sources:EconoTimes: Bank of Korea CBDC Pilot Skips Independent Security AuditCoinDesk: Bank of Korea Prepares for Live CBDC Transactions with Nine Banks in SeptemberCryptoTimes: South Korea Targets September for Won Stablecoin Bill
