Bank of Korea Expands Digital Won Pilot to Nine Banks

The Bank of Korea has added Kyongnam Bank and iM Bank to Project Hangang, bringing the total number of participating commercial lenders to nine as the digital won pilot moves into a second phase focused on large-scale real-world applications.

What Phase Two Actually Tests

According to report by Coindesk, the first phase established the technical foundation. Phase two is about operational scale and specific use cases that the initial testing did not fully address.

The primary focus is the distribution of 110 trillion won in national treasury subsidies through digital deposit tokens. The BOK’s stated objective is transparency and purpose-bound spending – ensuring that allocated funds are used for their intended application rather than redirected. Programmable money enables that kind of conditional logic in a way that traditional bank transfers do not.

Reduced transaction fees are the second major use case. The pilot targets both large businesses and small merchants, testing whether digital currency can materially lower payment costs compared to standard credit card processing infrastructure. That is a commercially significant question. Card processing fees represent a meaningful cost for merchants operating at scale, and for small businesses they represent a disproportionate burden relative to margins.

Peer-to-peer transfers are also being introduced in phase two. Direct user-to-user transactions were not fully implemented in the initial testing stages. Their inclusion now brings the digital won closer to a functional retail payment instrument rather than a wholesale settlement tool.

The most forward-looking element is the BOK’s exploration of AI agent compatibility. The pilot includes testing for autonomous AI agents that can independently purchase goods and services using the digital won. That use case is early and its commercial path is undefined, but it signals that the BOK is designing for infrastructure that extends beyond current payment paradigms.

Nine Banks, 100,000 Participants

The full participant list now includes KB Kookmin, Shinhan, Woori, Hana, NH Nonghyup, IBK Industrial, BNK Busan, Kyongnam Bank, and iM Bank. Real-world transactions involving 100,000 selected participants are expected to continue through the first half of 2026.

The addition of Kyongnam and iM Bank is not cosmetic. A broader bank base tests interoperability across different institutional systems and expands the geographic and customer demographic coverage of the pilot. Regional banks serve different client profiles than the major national lenders, and their inclusion generates more diverse transaction data.

The Regulatory Context Behind the Acceleration

Project Hangang’s expansion is not happening in isolation. South Korea’s Digital Asset Basic Act, known as DABA, is facing delays due to regulatory disagreements over stablecoin issuance rights. That legislative stall has created a gap in the country’s broader digital finance framework.

The BOK is accelerating the commercialization of bank-issued deposit tokens in part as a response to that gap. Deposit tokens built on a wholesale CBDC layer represent a more controlled, regulated alternative to privately issued stablecoins. By moving the pilot forward while DABA stalls, the central bank is positioning its own infrastructure as the default architecture for digital payments in Korea regardless of how the stablecoin debate resolves.

That is a significant institutional posture. It reflects a preference for central bank-anchored digital money over market-issued alternatives, and it shapes the competitive landscape for any private stablecoin issuer seeking to operate in the Korean market once DABA does pass.

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