South Korea’s government is cutting purchasing cards out of its budget operations. The Ministry of Economy and Finance announced April 16 that a blockchain-based deposit token pilot had been selected under the 2026 regulatory sandbox program. The ministry confirmed the designation makes it possible to use deposit tokens instead of government purchasing cards for operating-expense payments.
The scope here is not small. The initiative forms part of a strategy to digitize one-quarter of all treasury fund executions by 2030. That is a national fiscal transformation, not a lab test.
What These Tokens Actually Change
Token-based payments can be programmed with spending limits and restrictions on how they can be spent, cutting down audits and lowering transaction fees by removing intermediaries. Government purchasing cards currently trigger manual reporting when transactions happen outside normal hours. The deposit token system removes that friction entirely.
The ministry plans to replace traditional government credit cards with programmable digital payments that feature predefined limits on timing and usage categories. Small businesses receiving government payments stand to benefit directly. Card network fees come out of those transactions. They would not with deposit tokens.
The pilot runs in Sejong City. The government will collaborate with selected operators and agencies to define technical and operational frameworks, with officials aiming to launch full implementation during the fourth quarter of the year.
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This Is Actually Round Two
The initiative builds on a previous project launched in March involving the Environment Ministry and the Bank of Korea, which used tokenized deposits to manage 30 billion won in subsidies for electric vehicle charging stations. That pilot worked. South Korea is now pushing the model into core budget operations.
Deputy Prime Minister Koo Yun-cheol stated the government’s goal is to convert one-quarter of treasury fund disbursements to digital currency by 2030, and confirmed plans to actively identify and expand digital currency utilization projects through consultations with relevant ministries and meetings with commercial banks.
The Bank of Korea’s Project Hangang sits behind all of this. The project evaluates whether deposit tokens issued by commercial banks can circulate effectively on blockchain platforms, with the system allowing restrictions on token usage, making them suitable for vouchers and targeted subsidies.
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Phase 1 Numbers Tell the Story
Phase 1 of Project Hangang ran for approximately three months beginning in April 2025, onboarded up to 100,000 participants, and recorded 118,000 payment test transactions, validating that a deposit-token-based payment and settlement system could operate stably in a live environment.
Not everything worked cleanly. While 100,000 citizens were invited to participate, only around 80,000 actually opened digital wallets, and total payment volume reached just 692.46 million won. The ministry absorbed those numbers and moved forward anyway. Phase 2 added biometric authentication and peer-to-peer wallet transfers to close the gap.
A Ministry of Finance and Economy official noted deposit tokens allow pre-restricted usage purposes, preventing fraudulent use, and confirmed plans to utilize them for operational expenses and other areas going forward.
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The stablecoin question has not gone away either. A Ministry of Economy and Finance official said the government is reviewing how far to allow stablecoins in foreign exchange transactions and what to restrict, with legal revisions targeted within 2026 or clear policy direction set by year-end. That review runs parallel to the deposit token work.
South Korea is not theorizing about digital public finance anymore. The regulatory sandbox is live. Sejong City is the testing ground. Q4 2026 is the target.
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