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 broader effort to modernize public fund management. According to local media reports, the ministry has secured approval for the pilot under the 2026 regulatory sandbox program, which will enable the use of digital currency to disburse Treasury funds. The approved pilot will allow business promotion expenses, currently processed using government purchasing cards, to be paid using tokenized deposits, thereby altering the long-standing system governed by the Treasury Funds Management Act that required card-based payments. In the sandbox environment, government agencies will be able to operate outside the existing rules on a limited basis to test new methods, with the expectation of improving oversight. Token-based payments can be programmed with predefined conditions, including spending limits and permissible industries, which could reduce the need for manual audits, particularly when spending occurs outside standard hours. The system also eliminates intermediaries such as card networks, which could lead to lower transaction fees for small businesses receiving government payments, according to the ministry. This initiative 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, with plans to expand the program if it demonstrates stronger control over spending and measurable cost savings.