South Korea to pilot tokenized deposits for government spending

The sandbox will test preset spending limits, timing controls and category restrictions for public sector expense payments.

South Korea’s Ministry of Economy and Finance (MOEF) is preparing to test blockchain-based payments for certain government expenses under a regulatory sandbox exploring distributed ledger technology (DLT)-based financial infrastructure.

The ministry said on Thursday that it selected a pilot project that will use tokenized deposits to execute government operational spending, with a full rollout targeting the fourth quarter of 2026. The program will initially launch in Sejong City and will test predefined spending conditions, including limits on timing and usage categories. 

Tokenized deposits are digital representations of traditional bank deposits on blockchain or other DLT infrastructure. Unlike many stablecoins, they remain bank liabilities and are designed to operate within the existing financial system.

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