A national petition opposing the Bank of Korea's push to introduce "deposit tokens and a Central Bank Digital Currency (CBDC)" was filed on the 11th of last month. The petitioner said it is "a structure that allows the state to track every financial transaction in real time," and noted that "even though this is directly tied to the people's basic rights, it is being pushed unilaterally without sufficient public discussion." The petition won 95,367 consents one month after it was filed.
The petition makes three main claims. "Even if you spend just 10 won of a deposit token, personal information can be tracked," "the government can manipulate deposit tokens to freeze assets," and "the United States banned it, but China is using it," among others.
A Bank of Korea official said these are "claims without basis." The explanation is that the structure of deposit tokens makes tracking personal information or freezing assets impossible. The Bank of Korea (BOK) also said the United States is pursuing a Central Bank Digital Currency (CBDC).
① Can deposit token transaction data be tracked in real time?
The national petition claims that "the state or the Central Bank has a structure that allows it to collect and analyze all citizens' transaction data in real time."
But the Bank of Korea counters that this claim is a misunderstanding. The BOK's introduction of "deposit tokens and a Central Bank Digital Currency (CBDC)" is being carried out through a pilot program called "Project Hangang." Under the model, financial institutions use the Central Bank Digital Currency, while individuals use deposit tokens.
The Bank of Korea said that when an individual uses a deposit token, it can know only that "it was transferred from wallet (account) A to wallet B." It said it does not track information such as a particular person using a deposit token to conduct a transaction at a specific place for a specific purpose.
The BOK said this type of transfer information is a structure common not only to deposit tokens but also to assets based on Blockchain technology. A BOK official said, "With bitcoin, anyone can check the transaction history, but you don't know who owns it or where it was spent."
② Can the government seize deposit tokens?
The national petition also raises the suspicion that "the government can control deposit tokens to freeze assets." For example, if the issuer of a deposit token sets a condition (programming) that it "can only be used to buy eggs in retail sectors with annual sales under 1 billion won," the claim is that the structure could make payments with deposit tokens impossible for other purposes or uses.
However, the Bank of Korea explains, "Looking at the structure of deposit tokens, you can see the government does not have authority." A deposit token is simply cash an individual has entrusted to a commercial bank, converted into a digital form. At convenience stores, marts, and cafes, people can use their phones to pay with deposit tokens. A BOK official said, "A deposit token is money that a commercial bank must pay to a customer who has entrusted it with cash," adding, "Commercial banks bear full responsibility for deposit tokens." The official also said, "Programming records such as restrictions on where deposit tokens can be used are shared, verified, and recorded on the Blockchain."
③ Did the United States ban a Central Bank Digital Currency?
The national petition also claims that the United States passed a bill banning a Central Bank Digital Currency (CBDC). It suggests the Bank of Korea's Project Hangang follows China's model. China is actively using a CBDC.
The Bank of Korea said the United States is also pursuing a CBDC. In "Project Agora," a CBDC initiative led by the Bank for International Settlements (BIS), the bank of central banks, key currency countries including the United States (the United Kingdom, Japan, Europe, and Switzerland), as well as Korea and Mexico, are participating.
The U.S. digital currency system is divided into the Federal Reserve's CBDC and stablecoins used by general consumers. What the United States has banned is distributing a Fed-issued CBDC to consumers.
A Bank of Korea official said, "The difference between Korea and the United States is whether it is a stablecoin issued by the private sector or a deposit token issued by a commercial bank."