South Korea’s first central bank digital currency (CBDC) pilot is facing new scrutiny after a local report claimed the project moved forward without an independent government security inspection, raising concerns about oversight as the country expands its blockchain-based payment initiatives.
According to Maeil Business, citing data submitted by the Financial Supervisory Service (FSS) to People Power Party lawmaker Lee Heon-seung, regulators did not conduct a separate security inspection during the first phase of the Bank of Korea’s CBDC pilot, which ran from April to June last year.
Instead, security checks were completed before the pilot began through an IT security review and vulnerability assessment in February. Those assessments involved participating banks, including Woori Bank and NongHyup Bank, as well as the Financial Security Institute and cybersecurity firm SK Shields.
Why the security review is questioned
The report said the security assessment relied partly on institutions directly involved in the CBDC pilot, prompting questions about whether the review was sufficiently independent.
According to documents reviewed by Maeil Business, there was no evidence of an external government inspection or third-party security audit after the pilot ended.
The newspaper argued that this is significant because the pilot tested infrastructure that could eventually support part of South Korea’s future payment system. It added that conclusions about the system’s security were largely based on reviews carried out by organizations participating in the project.
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Bank of Korea defends its approach
The Bank of Korea rejected concerns over the security of deposit tokens in its report on the country’s first real-transaction CBDC pilot.
The central bank said it completed extensive security reviews before launching Project Han River and maintained that additional inspections during or after the pilot were unnecessary. According to the Bank of Korea, the process followed supervisory procedures established by the Financial Supervisory Service.
However, Maeil Business argued that the central bank’s explanation defended its own review process rather than presenting findings from an independent assessment.
The report also noted limited regulatory coordination, saying only one formal consultation on CBDC or deposit token-related products took place between banks and the FSS over the past three years.
CBDC plans continue alongside stablecoin push
The report comes as South Korea continues developing both its CBDC program and a regulatory framework for won-backed stablecoins.
The Bank of Korea previously paused preparations for the second phase of Project Han River after participating banks reportedly raised concerns over costs and the lack of a clear business model.
Despite that pause, authorities are continuing work on digital payment infrastructure. Earlier this month, Gyeonggi Province announced the country’s first government-backed blockchain stablecoin pilot. At the same time, financial regulators also launched a roadmap covering won-backed stablecoins, institutional CBDC pilots tied to tokenized government bonds, and broader blockchain payment infrastructure.
The Bank of Korea has maintained that deposit tokens are separate from privately issued stablecoins, saying they are designed to represent commercial bank deposits on blockchain infrastructure connected to its wholesale CBDC system.
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