South Korea to Allocate 25% of $499B Budget in Crypto by 2030

South Korea plans to allocate 25% of its $499 billion budget using digital tokens by 2030. This initiative is part of the Project Hangang CBDC system and includes subsidies for electric vehicles.

The government aims to begin the rollout with deposit tokens in 2026. This move is expected to streamline fiscal operations and reduce fraud.

Legislative changes are being proposed to support the use of digital assets. These include revisions to the National Treasury Fund Management Act and the introduction of stablecoin regulations.

Why the Move Happened

The Ministry of Economy and Finance emphasized the need for proactive fiscal policy to drive economic transformation. Deputy Prime Minister Koo Yun-cheol stated, We are going to be more aggressive with fiscal policy and make a big change.

The Project Hangang experiment by the Bank of Korea aims to test how deposit tokens can function as limited vouchers. This includes assessing their circulation and redemption on blockchain platforms.

Regulatory adjustments are being made to align with the new digital asset framework. The Financial Services Commission will lead these changes, ensuring compliance with the upcoming Digital Asset Basic Act.

How Markets Responded

The proposed changes are expected to enhance the efficiency of government fund distribution. By integrating digital wallets with the National Fiscal Integrated Information System, the government aims to streamline transactions.

The introduction of deposit tokens is likely to impact the EV sector first. Charging stations will use these tokens, reducing settlement times and preventing fraud.

Market participants are watching how stablecoin regulations will affect cross-border transactions. The government is considering measures to prevent illegal activities involving stablecoins.

What Analysts Are Watching

The success of Project Hangang will depend on pilot outcomes. The government plans to review results from 2023 and 2024 before expanding the program.

Analysts are also monitoring the impact of Bitcoin spot ETF approvals. South Korea plans to allow these products in 2026, aligning with global trends in the U.S. and Hong Kong.

Regulatory clarity on stablecoins will be crucial. The proposed requirements for full reserves and redemption rights aim to ensure stability and security for users.

The transition to a blockchain-based fiscal system could reshape South Korea's digital economy. By 2030, 25% of treasury transactions are expected to be conducted using deposit tokens.

The government's efforts to digitize public finance include legal revisions to the Bank of Korea Act and the National Treasury Management Act.

Public institutions will receive digital wallets to process payments and settlements. These systems will be integrated with existing accounting processes.