South Korea’s Ministry of Economy and Finance (MOEF) will test blockchain-based tokenized deposits for certain government expenditures as part of a regulatory sandbox exploring distributed ledger technology (DLT) financial infrastructure. The pilot, which the ministry selected on Thursday, aims for a full rollout in the fourth quarter of 2026 and will initially launch in Sejong City.
Tokenized deposits are digital representations of conventional bank deposits recorded on a blockchain or other DLT. Unlike many stablecoins, they remain liabilities of banks and are intended to operate within the existing financial system. The planned pilot will use these bank-backed tokens to execute government operational spending and test whether programmable, tokenized money can improve traceability and reduce misuse.
The sandbox will define the trial’s scope and limits in coordination with participating institutions, and results may inform legal and regulatory changes. The initiative focuses on government operational expenses that are currently handled through government-issued credit and debit cards and reconciled via post-use reporting. Under the pilot, spending parameters such as allowed time windows and permitted spending categories will be predefined to evaluate oversight improvements.
Sandbox approval permits the use of tokenized deposits for fund execution even though current rules typically require such expenses to be processed through government cards. The MOEF said the trial will serve as a basis for assessing new payment and settlement methods and could have broader implications for fiscal operations if the model proves viable.
This operational-spending pilot expands South Korea’s use of tokenized deposits beyond previous subsidy trials. In March, the Environment Ministry and Bank of Korea announced a pilot using tokenized deposits for electric vehicle charging infrastructure subsidies. MOEF has also expressed a broader goal of converting one-quarter of treasury fund execution to digital currency by 2030, indicating the current pilot is part of a longer-term effort to integrate tokenized payment rails into public finance.