Bank of Korea Moves Project Hangang Into Phase Two With 500,000 Users Set to Test Deposit Tokens

South Korea is preparing to expand its digital-currency experimentation as the Bank of Korea's Project Hangang moves into its second phase in September 2026. According to the information shown in the supplied post, the pilot will expand from seven participating banks to nine and increase the number of participating user wallets from 100,000 to 500,000. The expansion represents a significant step in South Korea's examination of how tokenized bank deposits could function in everyday payments. Project Hangang is focused on deposit tokens, a form of digital representation of commercial-bank deposits. Unlike a conventional cryptocurrency issued independently of the banking system, a deposit token is designed to represent a claim on funds held within a participating bank. The underlying objective is to explore whether existing money held in bank accounts can be transferred and used through digital infrastructure while maintaining the relationship between commercial banks and their customers. The move from 100,000 to 500,000 wallets is particularly important because a larger user base can provide the central bank and participating financial institutions with considerably more information about how the system behaves under realistic conditions. A small technical demonstration can show whether a system works. A substantially larger pilot can begin revealing practical issues involving transaction volumes, user experience, authentication, settlement and interoperability between participating institutions. The second phase is also expected to introduce peer-to-peer transfers. This could allow participating users to send deposit tokens directly between one another within the pilot environment. Such functionality is important because a payment system needs to support more than institutional transfers. Everyday users need to be able to move value conveniently between people and businesses. Biometric authentication is another feature highlighted in the supplied report. The inclusion of biometric payments suggests that the project is examining how digital financial systems can combine secure identity verification with convenient payment experiences. If implemented effectively, users could potentially authenticate transactions without relying exclusively on conventional passwords or physical payment instruments. Automatic top-up functionality is also planned. This would allow users to replenish their digital wallets according to predefined conditions, reducing the need to manually transfer funds whenever a wallet balance becomes low. Such features could make tokenized deposits more practical for routine payments. Perhaps one of the most significant experiments involves government subsidy distributions. The pilot is expected to test the use of deposit tokens for government payments such as electric-vehicle grants. This introduces a practical public-sector use case for programmable digital money. Government payments are particularly interesting because digital tokens could potentially allow authorities to distribute funds directly to eligible recipients while creating a more transparent and efficient payment process. Depending on how the technology is designed, governments could potentially establish rules concerning eligibility, timing or permitted uses. However, such systems would also require careful consideration of privacy, consumer protection and control over funds. The expansion of Project Hangang comes amid a broader global movement toward tokenized financial infrastructure. Central banks and commercial institutions in different jurisdictions are experimenting with central-bank digital currencies, tokenized deposits and other forms of digital settlement. These projects are examining whether blockchain or distributed-ledger technology can improve the efficiency of existing financial systems. South Korea's approach is notable because it places commercial banks at the center of the experiment. Rather than immediately replacing traditional banking deposits, the project explores how deposits could potentially operate through a new digital infrastructure. For the financial industry, the results could have long-term implications. Successful testing could encourage banks to develop additional tokenized financial services, while regulators could gain practical information needed to establish rules for digital money. However, scaling a pilot does not guarantee nationwide adoption. Security, privacy, interoperability, legal frameworks and consumer acceptance will all determine whether deposit tokens can move beyond experimentation. The September expansion therefore represents an important test rather than a final decision on the future of South Korean money. Moving to 500,000 users gives the Bank of Korea an opportunity to observe how tokenized deposits perform when used by a much larger population and across more participating banks. If the system performs successfully, Project Hangang could provide South Korea with valuable experience as financial institutions worldwide explore the transition from traditional account-based infrastructure toward increasingly programmable and tokenized forms of money.