South Korea to Introduce Blockchain-Based Deposit Tokens for Government Expenditure in Q4

The South Korean Ministry of Economy and Finance is set to launch a pilot program in the fourth quarter to test the use of blockchain-based deposit tokens for government expenditure, as part of a larger effort to modernize public fund management. According to local media reports, the pilot program, which involves using digital currency to spend Treasury funds, has been approved under the 2026 regulatory sandbox program. This approval enables the use of tokenized deposits to pay for business promotion expenses, which are currently processed using government purchasing cards. By doing so, it alters the long-standing system governed by the Treasury Funds Management Act, which previously required card-based payments. In the sandbox environment, agencies will be allowed to operate outside these rules on a limited basis to test new methods. Officials anticipate that this change will enhance oversight, as token-based payments can be programmed with predefined conditions, including spending limits and restrictions on which industries can accept them. This could reduce the need for manual audits, particularly when spending occurs outside standard hours. Additionally, the system eliminates intermediaries such as card networks, which the ministry believes could lower transaction fees for small businesses receiving government payments. This marks the second instance of using deposit tokens in Treasury operations, following an earlier pilot related to subsidies for electric vehicle-charging infrastructure. The trial is scheduled to take place in Sejong City after a selection process for participating firms, and the ministry plans to expand the program if it demonstrates stronger control over spending and measurable cost savings.