Korea’s Digital Won: When Subsidies Go Blockchain, Will Your Grandma Notice?

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The Bank of Korea, in a move that screams “we’re totally not overcompensating for something,” has unleashed Phase 2 of Project Hangang, their digital won pilot. This time, they’ve roped in nine banks and decided to throw real government subsidies into the blockchain blender. Because nothing says “financial innovation” like giving grandma her pension in a format she’ll never understand.

  • Project Hangang Phase 2 now includes two more banks, because seven just wasn’t enough to confuse the average citizen. Also, they’re testing real subsidy payments, because what could possibly go wrong?
  • New features like biometric approvals and P2P wallet transfers aim to fix Phase 1’s embarrassing turnout. Turns out, spending 30-35 billion won on infrastructure doesn’t guarantee people will actually use it. Who knew?
  • Seoul is calling deposit tokens the “middle child” of CBDCs and stablecoins, because why not add another layer of confusion? They’re also dreaming of AI-powered payments, because apparently, humans are just too messy.

On Wednesday, the Bank of Korea (BOK) proudly announced the second phase of Project Hangang, their grand experiment in blockchain-based payments. They’ve added Kyongnam Bank and iM Bank to the mix, because nine banks are clearly better than seven. The project, conducted with the Financial Services Commission and the Financial Supervisory Service, is now testing deposit tokens for government subsidies and nationwide payments. Because if there’s one thing the world needs, it’s more acronyms.

From “What Is Blockchain?” to “Where’s My Money?”

Phase 1, which ran for three months starting in April 2025, was a smashing success if your definition of success is “barely functional.” Out of 100,000 invited participants, only 80,000 bothered to open wallets, and the total payment volume was a whopping 692.46 million won. The banks, who collectively spent 30-35 billion won on this, are now questioning whether this was the best use of their money. Spoiler: It wasn’t.

Phase 2 introduces biometric authentication, P2P transfers, and automatic top-ups, because apparently, the problem was that the first phase wasn’t complicated enough. The BOK insists these improvements will make it as user-friendly as existing payment systems, which is like saying a unicycle is as practical as a car.

The real star of Phase 2 is the integration of government subsidies. South Korea’s government, in a bid to cut costs and reduce misuse, is exploring the idea of distributing part of its $499 billion budget via this system. Because nothing says “fiscal efficiency” like adding blockchain to the mix.

The BOK, in their announcement, was quick to downplay expectations, calling the digital currency “an intermediate stage between a CBDC and stablecoins.” Translation: “We’re not sure what this is, but we’re doing it anyway.” They also stressed that this isn’t a full retail CBDC, just a test. For the banks, it’s “an opportunity to try using it in advance,” which is code for “good luck figuring this out.”

Large-scale real transactions are planned for the second half of 2026, with the goal of reducing payment fees for small businesses and building infrastructure for AI-based payments. Because if there’s one thing small businesses need, it’s more AI in their lives.

This all comes after the BOK’s February 2026 report urging regulators to restrict stablecoin issuance to licensed banks, because apparently, they’re worried about money laundering and financial stability. Or maybe they just don’t want anyone else having fun with digital currency.

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2026-03-19 00:58