South Korea pilots blockchain tokens for public spending

South Korea will pilot blockchain-based deposit tokens for government spending in late 2026, aiming to replace card payments and enhance transparency and efficiency in public fund management.

South Korea is advancing its digital finance strategy by piloting blockchain-based deposit tokens for government spending. The Ministry of Economy and Finance will oversee the pilot, which is scheduled to launch in the fourth quarter of 2026 as part of a regulatory sandbox program. This initiative will test deposit tokens—digital representations of bank deposits issued on distributed ledger technology—for managing business promotion expenses and Treasury payments. These tokens are fully backed by fiat currency and enable programmable, instant, and compliant transactions, offering enhanced transparency, efficiency, and control over public funds. The project builds on previous pilots involving tokenized government subsidies and aims to streamline administrative processes, reduce manual reporting, and lower transaction fees. The Bank of Korea is also expanding its deposit token pilot under Project Hangang, involving nine commercial banks to test real-world applications such as retail payments and government subsidy distribution. This move reflects a broader trend of integrating blockchain technology into public sector finance to improve oversight and modernize fund management.