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South Korea to Test Deposit Tokens for Government Spending
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Nine major banks will participate in the pilot, which replaces government purchase cards with programmable blockchain-based payments starting in Q4.
Key facts
- The ministry announced today that the project was selected as a 2026 regulatory sandbox initiative overseen by the Office for Government Policy Coordination
- The pilot targets a full launch in Q4 2026, beginning in the administrative capital of Sejong City
- Under South Korea's National Treasury Management Act, government operational expenses, such as business promotion costs, must currently be processed through government-issued purchase cards
- The move comes as South Korea's broader digital asset policy has shifted toward a more permissive stance following the election of President Lee Jae Myung, who campaigned on promises to approve spot
Summary
South Korea's Ministry of Economy and Finance will pilot blockchain-based deposit tokens for executing government operational expenses, marking a significant expansion of the country's digital currency infrastructure into day-to-day public spending. The ministry announced today that the project was selected as a 2026 regulatory sandbox initiative overseen by the Office for Government Policy Coordination. Transactions made during restricted periods, such as late nights or weekends, require additional post-use justification, creating administrative friction. The sandbox designation temporarily exempts the pilot from those card-based requirements, allowing deposit tokens to serve as the payment instrument instead. Nine major Korean banks are participating in the experiment, including KB Kookmin, Shinhan, Woori, and Hana. The project is the second deposit token-based treasury payment initiative in South Korea, following a March pilot led by the Ministry of Climate, Energy and Environment and the Bank of Korea that used tokenized deposits to distribute 30 billion won ($21.4 million) in subsidies for electric vehicle charging infrastructure.
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