Three Firms Vie to Develop South Korea’s CBDC Pilot

Three Firms Vie to Develop South Korea’s CBDC Pilot

Three South Korean firms will compete for the chance to develop the central bank’s digital currency (CBDC) pilot.

The Bank of Korea (BOK) confirmed on July 12 that Line Plus, Ground X and SK C&C have entered bids to contribute R&D work on the project.

BOK announced in May that it would hold a bidding process to select a “technology supplier” for its CBDC test. The central bank has not confirmed however, that it will go ahead with issuing a CBDC after the pilot is finished. In fact, BOK has made it clear that it plans to only conduct “preliminary research” on CBDC adoption and viability.

BOK is expected to announce its selection sometime in August based on its evaluation of each firm’s technological capacity. The company that wins the bid will work on the country’s CBDC experiment from August 2021 to June 2022.

The pilot will be divided into two phases. The first will run from August to December of this year. This initial phase will focus on laying the technical groundwork and determining the specific technology required for issuing a CBDC.

The second will take place between January and June of 2022. This phase will focus on making real-life transactions and settlements, using CBDCs to purchase other digital assets and implementing privacy protections.

The CBDC pilot contenders

Line Plus is an affiliate of the portal site operator Naver; Ground X is the blockchain subsidiary of mobile platform Kakao; and SK C&C is the IT and system integration (SI) arm of the SK Group conglomerate.

Line Plus and Ground X publicly expressed interest in BOK’s potential CBDC project from the onset. Both firms offered their services as consultants when BOK began CBDC discussions last year.

Line Plus launched a website devoted to explaining its CBDC and blockchain technology on July 11. Line indicated that it plans on developing a three-layer blockchain for its CBDC platform: a network layer, a consensus layer and an application layer.

It also claimed it will support inter-chain protocols that will allow Line’s blockchain to interact with chains of CBDCs from other countries.

Ground X operates its own blockchain platform Klaytn, which has a governance council that includes the likes of LG Electronics and Binance.

Ground X also developed the technology for CBDC projects in Singapore, Australia and Thailand.

SK C&C launched its private enterprise blockchain ChainZ for Ethereum in June 2020. It allows approved entities to issue and trade their own tokens on the chain. SK C&C also provides its own key recovery service.

No consortia were permitted to partake in the bidding process. The central bank clarified that it wanted to partner with a single entity while the CBDC pilot is still in its R&D phase.