South Korea’s Ministry of Economy and Finance announced the launch of a pilot project to test the use of deposit tokens for government payments. The initiative will be carried out within a regulatory sandbox.
South Korea’s Ministry of Economy and Finance announced that the pilot will involve moving part of government agencies’ operational expenses onto blockchain infrastructure. In particular, it’ll test the use of digital currencies and tokenized bank deposits to cover entertainment and business expenses. The goal is to improve transparency in public spending and reduce costs.
Currently, such expenses in South Korea are processed through government-issued corporate credit and debit cards, and transactions made outside business hours require additional justification. Existing regulations limit the use of alternative payment methods, but inclusion in the regulatory sandbox allows these restrictions to be temporarily lifted to test a new settlement model.
The pilot will run on blockchain technology, with predefined parameters for how funds can be used, including permitted times and expense categories. This approach is expected to automate oversight of public spending and minimize violations. The model also enables direct payments without intermediaries, which should help reduce fees for small businesses.
Practical implementation will begin after participants are selected and testing parameters are finalized. The full rollout of the pilot is scheduled for Q4 2026. The city of Sejong will be the first region involved, with plans to expand the model to other areas of government spending and introduce regulatory changes if the pilot proves successful.
In 2025, South Korea’s new government began building out a broader crypto market framework, including plans to launch crypto ETFs, establish regulations for stablecoins, and reduce crypto exchange fees. At the same time, South Korean banks formed a consortium to issue stablecoins backed by the national currency.
