South Korea has launched a nationwide initiative to expand the use of central bank digital currency (CBDC)-based deposit token payments, marking another step toward integrating blockchain-powered payments into everyday commerce.
The new project, announced by the Ministry of Science and ICT and the Korea Internet & Security Agency (KISA), aims to build payment infrastructure that enables consumers and businesses to transact using deposit tokens issued by commercial banks on top of the Bank of Korea’s wholesale CBDC system. The initiative builds on the country’s earlier Project Hangang pilot, which successfully tested tokenized bank deposits in real-world payment scenarios.
Backed by a budget of 9.6 billion won (approximately $6.9 million), the project forms part of South Korea’s 2026 Blockchain Innovation Leading Project program, which supports large-scale blockchain deployments for public services and commercial applications. Authorities said this year’s initiative focuses on reducing payment processing costs for merchants while improving transaction efficiency through blockchain technology.
The Korea Financial Telecommunications and Clearings Institute (KFTC) will oversee the project alongside a consortium comprising nine commercial banks, eight payment service providers, and two major retail merchants. Rather than requiring businesses to replace their existing payment infrastructure, the system will integrate with current banking and payment rails, allowing deposit token transactions to be processed using existing terminals and merchant systems.
Unlike retail CBDCs issued directly by central banks, deposit tokens are digital representations of commercial bank deposits that settle using a wholesale CBDC operated by the Bank of Korea. Consumers continue using commercial banks while benefiting from blockchain-based settlement, offering faster transaction processing and programmable payment capabilities without significantly changing the existing banking experience.
The nationwide rollout follows the completion of Project Hangang’s initial testing phase, during which participating banks evaluated the practicality of deposit token payments across thousands of merchants. The next phase significantly expands participation by introducing additional financial institutions, payment providers, and commercial partners while preparing the infrastructure for broader public adoption.
Officials expect the expanded network to support additional payment functions beyond consumer purchases. Future testing phases are expected to include peer-to-peer transfers, business-to-business settlements, and programmable government payments, enabling authorities to distribute subsidies or public funds using blockchain-based deposit tokens with predefined spending conditions. Such programmable features could improve transparency while reducing administrative costs associated with traditional payment methods.
The initiative also aligns with South Korea’s broader digital finance strategy. Policymakers have increasingly explored blockchain technology for payments, settlements, and tokenized financial assets while simultaneously developing regulations for stablecoins and digital currencies. The Bank of Korea has continued refining its CBDC framework as financial institutions prepare for wider commercialization of tokenized money.
South Korea remains among the countries actively testing real-world applications of CBDC-related infrastructure. Rather than replacing traditional banking systems, the country’s approach focuses on integrating blockchain technology with existing financial networks through commercial banks, allowing consumers to continue using familiar payment services while benefiting from faster and more efficient settlement mechanisms.
As the pilot expands nationwide, authorities will evaluate transaction performance, security, merchant adoption, and operational efficiency before determining the next steps toward full-scale commercialization. The results could influence how blockchain-based payment infrastructure is implemented across South Korea’s financial sector and serve as a reference model for other jurisdictions exploring tokenized banking systems.
