Bank of Korea Brings CBDC-Linked Deposit Tokens to State Subsidies

Deposit tokens are bank deposits reissued onchain as a spendable instrument, which allows conditions such as permitted use and expiry to be written into the funds before disbursement. The first target is the Ministry of Climate, Energy and Environment's electric vehicle charging infrastructure subsidy programme, which pays firms installing chargers rather than drivers.

Conditions written into money

The programme covers medium-speed chargers rated at 30kW to 50kW with a budget of 30bn won ($20.4mn), according to the subsidy guidelines. About 60 firms will be selected on 24 Jul, when the deposit token system opens. The tokens will function as vouchers spendable only on approved uses: purchases from certified charger makers or electricity bills.

The design is expected to prevent misuse by limiting where the money can go, rather than auditing it afterwards, and to shorten settlement. "The EV charging subsidy will be the first test bed for the digital currency trial in Phase 2," a BoK official told a local outlet Herald Business. A separate track will pay public-sector business expenses in deposit tokens, with a trial ministry to be named within the year.

Nine banks, wider net

Five banks go live at the start of the subsidy track, with NH NongHyup, which handles the programme operator's accounts, issuing the vouchers and the others converting tokens back into cash, Herald Business reported. Recipient firms choose their own conversion bank. Four more join as systems are built, taking the total to nine, up from seven in Phase 1.

Phase 1 ran from April to June 2025 with 81,000 participants, measured by wallet, and 114,880 transactions, an average of 1.4 each. Local media attributed the low usage to a shortage of merchants and cumbersome payment steps. Phase 2 retail transactions are expected to begin as early as September, with no end date set, unlike the three-month first round. New functions include peer-to-peer transfers, biometric authentication and automatic conversion between deposits and tokens, and participating banks will sign up their own merchants.

Next on the policy track

The Ministry of Finance and Economy's second-half economic growth strategy, released on 14 Jul, separately commits to a 2027 pilot tokenizing government bonds, settled in wholesale CBDC issued by BoK. The same strategy commits to legislating a Digital Asset Basic Act in the second half, carrying the rules for won-denominated stablecoins.

The push comes as legislation for won-denominated stablecoins remains stalled. The ruling Democratic Party aims to introduce a combined Digital Asset Basic Act in September, carrying the stablecoin provisions. That depends on its August convention allowing the digital asset task force to be reconstituted and the government and party drafts to be reconciled.