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 ministry has received approval for the pilot under a 2026 regulatory sandbox initiative, which will enable the use of digital currency for Treasury fund expenditure. The approval will allow businesses to use tokenized deposits to pay for promotional expenses, which are currently processed using government-issued purchasing cards. This change marks a significant departure from the long-standing Treasury Funds Management Act, which previously required card-based payments. In the sandbox environment, government agencies will be permitted to operate outside these rules on a limited basis to test innovative methods. Officials anticipate that this change will enhance oversight, as token-based payments can be programmed with predefined conditions such as spending limits and industry-specific usage. This could reduce the need for manual audits, particularly when spending occurs outside regular hours. The new system also eliminates intermediaries such as card networks, which the ministry believes could lead to lower transaction fees for small businesses receiving government payments. This initiative marks the second instance of deposit tokens being used in Treasury operations, following an earlier pilot program 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, according to the report. The ministry plans to expand the program if it demonstrates improved control over expenditure and measurable cost savings.