Key Highlights
- Gyeonggi Province will launch the first phase of its stablecoin pilot in August.
- Blockchain security firm Zcrypto was selected to conduct the proof-of-concept after a 24-to-1 bidding process.
- The pilot will test the full stablecoin lifecycle, from issuance to settlement.
South Korea’s Gyeonggi Province will launch the first phase of a blockchain-based stablecoin pilot in August as local governments continue exploring digital payment infrastructure for public services.
According to local media outlet NexBlock, the province has commissioned blockchain security firm Zcrypto to conduct a proof-of-concept (PoC). The study will examine how stablecoins could support local currency programs, public subsidies, vouchers, and government payment systems.
The pilot follows a stablecoin feasibility study launched by the province earlier this year and is expected to conclude in February 2027.
Pilot to focus on public payment infrastructure
Unlike private-sector stablecoin projects aimed at payments or trading, Gyeonggi Province’s initiative is designed to evaluate whether blockchain technology can improve how public funds are issued, tracked, and settled.
The first phase, scheduled for August, will test the complete lifecycle of a stablecoin, including issuance, circulation, redemption, and settlement. A larger testbed is expected to run between October and December before the province evaluates whether the technology is suitable for practical deployment.
Executive Director Kim Bong-gyu of Zcrypto said the company secured the project after competing against 23 other applicants.
“We formed an advisory group with industry participants and were selected after a 24-to-1 competition.”
Authorities look to reduce fraud risks
One objective of the pilot is to determine whether blockchain technology can address weaknesses in existing public payment systems.
According to Kim, current subsidy and voucher programs can be vulnerable to duplicate claims and misuse, while privacy rules often make it difficult to verify eligibility across multiple benefit programs.
The project will test programmable payment rules alongside zero-knowledge proofs (ZKPs), allowing eligibility checks without exposing users’ personal information.
“We can verify whether usage limits have been exceeded while protecting individual privacy.”
The pilot will also evaluate Proof of Reserves (PoR) technology to determine whether reserve assets, backing the stablecoin, can be verified more frequently than through traditional reporting methods.
South Korea advances stablecoin development
The Gyeonggi Province pilot reflects South Korea’s broader push to explore regulated stablecoins for public-sector use as digital currencies gain momentum across the country.
In recent months, policymakers, financial institutions, and local governments have stepped up discussions around stablecoin adoption, with Gyeonggi’s initiative emerging as one of the country’s first efforts to test blockchain-based payments for government-backed programs rather than private financial services.
The project also builds on earlier work to strengthen the security of future digital payment systems. Earlier this year, South Korea selected BTQ Technologies to provide a post-quantum cryptography layer for a separate stablecoin proof of concept, enabling financial institutions to test quantum-resistant infrastructure without disrupting existing payment networks.
Broader concerns over foreign Stablecoins
Kim also argued that South Korea should develop domestic stablecoin infrastructure before foreign-issued digital currencies become more widely used.
“If Korea does not respond quickly, its digital payment infrastructure could become dependent on overseas systems.”
While no decision has been made on a permanent rollout, the province is expected to use the pilot’s findings to determine whether blockchain-based stablecoins could eventually support local currencies, public subsidies, and other government payment programs.
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