Tokenized deposits are digital representations of conventional bank deposits on distributed ledger infrastructure.
Crypto News
South Korea's Ministry of Economy and Finance is preparing to test blockchain-based payment infrastructure for public sector expenses under a regulatory sandbox, with a full rollout targeting the fourth quarter of 2026. The ministry announced Thursday that a pilot project using tokenized deposits will be launched initially in Sejong City, with predefined conditions governing how funds can be spent.
Tokenized deposits are digital representations of conventional bank deposits on distributed ledger infrastructure. Unlike many stablecoins, they remain bank liabilities and are designed to function within the existing financial system rather than outside it.
The pilot will focus on government operational expenses currently processed through government-issued credit and debit cards, which require post-use reporting. Under the new model, spending parameters, including time windows and permitted categories, will be set in advance, allowing authorities to test whether programmable blockchain-based payments can improve traceability and reduce the potential for misuse.
The sandbox approval allows tokenized deposits to be used for fund execution despite existing rules that mandate such expenses flow through government cards. The ministry said the trial will evaluate new payment and settlement methods, with potential implications for broader fiscal operations if the results support scaling.
South Korea's government has been expanding its tokenization experiments across multiple sectors. On March 19, the Ministry of Environment and Bank of Korea announced a pilot using tokenized deposits for electric vehicle charging subsidies. At the time, the Ministry of Economy and Finance said it aimed to convert one-quarter of treasury fund execution to digital currency by 2030.
The new operational spending pilot extends that ambition beyond subsidies and into routine government payments, which represent a larger and more complex use case for programmable money. The ministry plans to work with participating institutions to define the scope of the trial and to assess related legal and regulatory changes based on its results.
If the model proves viable, the government has indicated the framework could be applied to broader fiscal operations, making the Sejong City pilot a key early data point for the country's DLT-based financial infrastructure strategy.
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