South Korea’s Ministry of Finance and Economy is launching a new pilot project to test blockchain-based deposit tokens for expenses related to official duties.
Currently, government departments execute official business spending and other related expenses with government-issued credit or debit cards, according to the official press release.Â
Card usage during late hours or on non-business days would require an extra administrative process where officials submit and review reports that justify the irregular spending.
The ministry said the experiment is expected to resolve inefficiencies in the existing card-based system, leveraging the transparency of blockchain technology.
“When processing expenses with deposit tokens, we can pre-set allowable usage times and permitted categories of spending, enhancing the overall transparency,” the translated press release said, adding that the intermediary-free payment structure can reduce the burden of fees for small businesses.
The ministry said it will start selecting operators for the project and work closely with relevant agencies and businesses to finalize the scope of the experiment. It aims to launch a full implementation of the project in the fourth quarter of this year, centering around Sejong-si, the city planned as the administrative capital of the country.
If successful, the pilot may be expanded to other official businesses of the government, the ministry said.
The deposit token pilot is the ministry’s first project to operate solely under a broader regulatory sandbox designed to promote emerging industries. Last month, the ministry also launched a pilot project with the Ministry of Climate, Energy, and Environment that pays subsidies to electric vehicle charging stations with deposit tokens.
Meanwhile, South Korea is preparing for the Digital Asset Basic Act, a comprehensive set of rules for the local crypto industry covering stablecoins, real-world asset tokenization, and crypto exchange-traded funds.
While the bill was initially slated for finalization by the end of 2025, the ruling Democratic Party of Korea reportedly announced today that it would start to actively discuss the legislation after the June 3 regional elections.
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