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- The project combines government infrastructure and CBDC infrastructure for the Bank of Korea.
- Returns will be measured using a delivery-versus-payment method designed to reduce counterparty risk and settlement.
- The project is in line with a major shift in South Korea’s digital economy that is planned for next year.
- Officials see tokenization as a way to transform capital markets rather than introduce a new form of public debt.
South Korea to Pilot Tokenized Government Bonds
South Korea has approved the plans that the pilot of tokenized government bonds that will end the work of the Bank of Korea (BOK) to sell central bank digital currency (CBDC), indicating another step in the efforts of the country to modernize the construction of the financial market.
This was revealed at a cabinet meeting on July 14 as one of the government’s economic measures for the second half of 2026.
Instead of changing the way public debt is issued, the operator focuses on streamlining the way securities are issued, transferred and settled by replacing traditional post-trade sectors with blockchain infrastructure.
Wholesale CBDC Will Power Settlement
At the heart of this project is the Bank of Korea’s CBDC platform.
The pilot will use the central bank’s digital currency to settle transactions related to government bonds using a transfer-to-payment (DvP) system, allowing the bond and payment to be exchanged at the same time.
This policy aims to reduce the risk of default by eliminating the time gap that may exist between the transfer of security and the completion of payment.
Officials also hope that blockchain infrastructure will facilitate record keeping, streamline work processes and reduce reliance on intermediaries involved in security implementation.
Section on Financial Promotion
The tokenized bond operator is part of the overall effort to modernize South Korean financial markets through blockchain infrastructure.
Several initiatives are progressing in parallel:
- Project Until: The Bank of Korea continues to test a CBDC platform designed for inter-bank and money market transactions.
- Tokenized Securities: From February 4, 2027, digital securities will be regulated under the existing Capital Markets Act and the Electronic Securities Act, creating a regulatory framework for blockchain security.
- Digital Asset Basic Act: Lawmakers are preparing legislation that would regulate digital entrepreneurship, business protection and Korea’s successful stablecoins.
Together, these changes are designed to ensure that digital securities, digital currencies and regulatory frameworks develop simultaneously rather than in different ways.
Tokenization Moves Beyond Crypto Markets
Unlike many blockchain initiatives that focus on cryptocurrencies, the latest South Korean project focuses on traditional financial instruments.
Government officials see tokenization as an opportunity to improve existing capital markets by shortening settlement times, reducing operating costs and automating processes such as interest payments.
Bank of Korea Governor Hyun Song Shin previously described deposits as one of the biggest long-term investment opportunities, saying distributed technology could improve liquidity and reduce reliance on traditional clearing methods.
The government is following this path through regulated financial markets instead of using public cryptocurrencies, which represents a significant change in the use of blockchain technology.
Many Changes Are Running Simultaneously
The government is promoting a number of initiatives that create a digital currency in South Korea.
Along with the tokenized bond pilot, policymakers are preparing regulations for stablecoins, creating regulations for digital assets and stablecoins, and continuing to experiment with CBDC through Project Hangang.
Taken together, these projects show that South Korea is building the legal, technical and institutional infrastructure needed to support tokenized financial markets rather than anything like a separate blockchain experiment.
