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 trial of blockchain-based deposit tokens for government expenditure in the fourth quarter, as part of a broader initiative to modernize public fund management. According to local media reports, the ministry has obtained approval for the pilot program under the 2026 regulatory sandbox initiative, which will enable the use of digital currency for Treasury fund expenditure. This development allows for the replacement of traditional government purchasing cards with tokenized deposits for business promotion expenses. By operating within a sandbox environment, government agencies will be able to test new methods outside the boundaries of existing regulations, which have historically governed Treasury fund management. The new system is expected to enhance oversight, as token-based payments can be programmed with predefined conditions such as spending limits and industry-specific usage. This could lead to a reduction in manual audits, particularly for transactions that occur outside standard hours. Furthermore, the elimination of intermediaries such as card networks is anticipated to result in lower transaction fees for small businesses receiving government payments. This marks the second instance of deposit token utilization in Treasury operations, following a previous pilot program related to subsidies for electric vehicle-charging infrastructure. The trial is scheduled to take place in Sejong City, following a selection process for participating firms, with plans for potential expansion if the program demonstrates enhanced control over expenditure and measurable cost savings.