South Korea Launches Deposit Token Trial to Fix Delays in Public Spending System

Highlights:

• South Korea has launched a deposit token trial to replace government card payments.
• Deposit tokens allow authorities to control when and how government funds are used through preset rules.
• The pilot uses blockchain and a CBDC system to reduce costs in public payments.

South Korea’s Ministry of Economy and Finance will test blockchain deposit tokens for government spending through a new pilot program. The ministry introduced the deposit token trial to reduce delays and manual reviews in official expense processing. Currently, government departments use credit and debit cards for all transactions across agencies. However, officials must submit reports when spending occurs during nights or non-business days.

NEWS: 🇰🇷South Korea plans to replace government credit cards with blockchain-based "deposit tokens" starting in Sejong City this Q4 2026, leveraging programmable digital currency to ensure transparent spending and eliminate merchant fees. pic.twitter.com/inhSlVfaNl

— SolanaFloor (@SolanaFloor) April 16, 2026

Manual reporting slows approval times for government payments and increases the workload for finance officers reviewing each transaction. Therefore, the ministry will replace card-based expense processing with programmable deposit tokens to improve efficiency. Authorities will use deposit tokens to pre-set spending rules such as time limits and approved categories.

The blockchain system will record each transaction in real time to improve transparency across government spending activities. In addition, the system removes payment intermediaries, which reduces transaction fees for small businesses receiving government payments. The ministry will select operators in the coming months and coordinate with agencies to prepare for the pilot launch. Officials will first deploy the system in Sejong, which serves as the administrative capital.

Authorities expect to launch the full pilot during the fourth quarter of this year after completing preparations. This pilot is the first project under South Korea’s regulatory sandbox, which allows testing blockchain payments without full regulatory restrictions. The sandbox framework enables the government to test new financial systems while maintaining oversight.

Blockchain Deposit Token Trial Reshapes Public Payment Controls

Deposit tokens represent bank deposits on a one-to-one basis with fiat currency issued by participating financial institutions. Banks will issue these tokens using blockchain technology during the pilot program. At the same time, a wholesale central bank digital currency will support settlement processes across the system. The Bank of Korea will provide the infrastructure required to complete transactions during testing.

The deposit token trial introduces programmable payments into government operations by embedding spending rules directly into blockchain-based deposit tokens. Regulators can define when funds can be used and which sectors can receive payments.

Real-time blockchain records reduce reporting errors and allow finance teams to monitor government spending across departments instantly. In addition, the system can automate compliance reporting for each transaction without manual intervention. The pilot also builds on an earlier government program that used tokenized payments for EV charging subsidies. In that trial, officials distributed funds through blockchain tokens to support charging infrastructure projects.

The new pilot expands token-based payments from EV subsidies to daily government spending across multiple departments. Furthermore, authorities can include expiration rules that limit how long funds remain valid. This feature ensures that allocated budgets are used within defined timelines. As a result, the government can track public funds more efficiently and reduce unused allocations.

South Korea Launches Blockchain Project Amid Digital Asset Policy Debate

South Korea launched the deposit token trial while preparing new regulations for its digital asset sector through the Digital Asset Basic Act. Policymakers are drafting the law to regulate stablecoins, tokenized assets, and crypto exchange-traded funds. However, lawmakers delayed discussions until after the June 3 regional elections due to political scheduling priorities.

Meanwhile, Jeremy Allaire, the Chairman and CEO of Circle, addressed the issue during a recent visit to Seoul, where he discussed global stablecoin regulation trends. He stated that Circle would consider applying for a license if South Korea establishes clear regulatory guidelines. However, he confirmed that the company has no immediate plans to launch a won-based stablecoin.

Circle CEO Jeremy Allaire indicated a cautious approach to launching a Korean won stablecoin, citing the need for regulatory clarity. Despite this, Circle intends to expand its operations within South Korea once a stable regulatory environment is established. This suggests a…

— Ben Ruggles (@BenRustC) April 15, 2026