South Korea Set to Pilot Blockchain-Based Deposit Tokens for Government Expenditure

As part of a larger effort to modernize public fund management, South Korea's Ministry of Economy and Finance is slated to launch a trial of blockchain-based deposit tokens for government expenditure in the fourth quarter. According to local media, the ministry has received approval for a pilot program under the 2026 regulatory sandbox initiative, which will enable the use of digital currency for Treasury fund expenditures. This move allows for the replacement of traditional government purchasing cards with tokenized deposits for business promotion expenses. By operating within a sandbox environment, government agencies can temporarily bypass existing regulations governed by the Treasury Funds Management Act, which previously mandated card-based transactions. The introduction of token-based payments, which can be programmed with specific conditions such as spending limits and industry restrictions, is expected to enhance oversight and reduce the necessity for manual audits, particularly for off-hours transactions. The removal of intermediaries like card networks is also anticipated to lower transaction fees for small businesses receiving government payments. This pilot program marks the second instance of deposit tokens being used in Treasury operations, following an earlier trial related to subsidies for electric vehicle-charging infrastructure. The trial is set to take place in Sejong City, with participating firms to be selected shortly, and the ministry plans to expand the program if it yields improved spending control and significant cost savings.