Korean banks researching alternatives for stablecoins and CBDCs

Korean banks researching alternatives for stablecoins and CBDCs

Introducing Tokenized Deposit Technology in South Korea’s Banking System

South Korea has always been known for its forward-thinking approach in adopting new advancements and developments in its financial and economic structures. In recent news, several private banks in South Korea have come together to study the potential of tokenized deposit technology as an alternative to traditional banking systems. This technology aims to provide a stable and secure platform for transactions without disrupting the existing banking system.

Tokenized Deposits as an Alternative to Stablecoins and CBDCs

Tokenized deposit technology involves the creation of “certificate of deposit” tokens (CDs), which are essentially tokenized bank deposits placed on a blockchain platform. The main objective is to replace traditional deposits and customary notes while ensuring the smooth functioning of the banking system. Similar to other traditional banking services, CDs require identity verification to maintain security and compliance.

Senior bankers from top private-sector institutions such as Hana Bank and Woori Bank have expressed their interest in CD tokens. These tokens are regarded as stable from the banks’ perspective, as they do not significantly differ from the current banking system. This interest has risen due to concerns raised by financial regulators following the failures of stablecoins in 2022.

Compatibility of CD Tokens with CBDCs

As central banks across the world actively explore the concept of central bank digital currencies (CBDCs), it becomes crucial for any developments within the banking sector to consider compatibility with CBDCs. Hana Bank and Woori Bank, in their pursuit of tokenized deposit technology, are also part of a proof-of-concept test for a CBDC led by the Bank of Korea.

In July, the Bank of Korea revealed its ongoing preparations for the potential introduction of a CBDC. They are exploring the use of smart contracts, offline payments using near-field communications, and cross-border payments. The pilot program, involving 14 private banks, is currently operational. However, the project faces technical challenges as the system experienced a slowdown when approaching its capacity, despite managing to handle 2,000 transactions per second, higher than most domestic payment systems. The Bank of Korea is actively working to enhance the technical capabilities of the project.


The introduction of tokenized deposit technology in South Korea’s banking system marks another significant step forward in the country’s financial landscape. The use of CD tokens as an alternative to stablecoins and CBDCs reflects the need for stable and secure digital assets within the banking sector. Moreover, the compatibility of CD tokens with CBDCs demonstrates the collaborative efforts made by banks and regulators to shape the future of digital currencies.

As the development and adoption of blockchain technology continue to evolve, it is crucial for financial institutions and regulators to stay ahead of the curve and explore innovative solutions. The potential benefits that come with tokenized deposit technology, such as stability, security, and seamless compatibility with CBDCs, make it a promising avenue for further exploration and implementation in the banking industry in South Korea and beyond.

Advantages of Tokenized Deposit Technology Challenges and Next Steps
Provides stability and security in the banking system Enhancing technical capabilities to handle increased transaction volumes
Offers an alternative and more secure option to traditional deposits Addressing potential scalability issues as the system approaches its capacity
Compatible with central bank digital currencies (CBDCs), ensuring interoperability with future advancements in the field Streamlining identity verification processes to maintain security and compliance

In conclusion, the emergence of tokenized deposit technology in South Korea’s banking industry signifies a significant step towards a more secure, transparent, and efficient financial ecosystem. Banks, regulators, and technology providers must continue to collaborate and innovate to overcome challenges and seize the immense potential that blockchain-based solutions offer. By embracing tokenized deposit technology and its compatibility with CBDCs, South Korea is solidifying its position as a global leader in financial innovation.