South Korea to Introduce Blockchain-Based Deposit Tokens for Public 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 larger effort to modernize public fund management. According to local media, the ministry has received approval for the pilot program under the 2026 regulatory sandbox initiative, which will enable the use of digital currency for Treasury fund disbursements. The approval permits the use of tokenized deposits for business promotion expenses, which are currently processed using government purchasing cards. This change marks a departure from the traditional system governed by the Treasury Funds Management Act, which mandated card-based payments. In the sandbox environment, government agencies will be allowed to operate outside these rules on a limited basis to test innovative methods. Officials anticipate that the new system will enhance oversight, as token-based payments can be programmed with pre-defined conditions, such as spending limits and industry-specific usage. This could reduce the need for manual audits, particularly when transactions occur outside regular hours. The system also eliminates intermediaries like card networks, which the ministry believes could lead to lower transaction fees for small businesses receiving government payments. This is the second instance of deposit tokens being used in Treasury operations, following an earlier pilot project related to subsidies for electric vehicle charging infrastructure. The trial will be conducted in Sejong City after a selection process for participating companies, according to the report. The ministry plans to expand the program if it demonstrates improved control over expenditure and significant cost savings.