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, aiming to utilize 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 secured approval for the pilot under the 2026 regulatory sandbox program, which will enable the use of digital currency for Treasury fund expenditure. The approved pilot will allow businesses to use tokenized deposits for promotional expenses, which are currently processed using government purchasing cards. This move marks a significant shift from the traditional system governed by the Treasury Funds Management Act, which mandated the use of card-based payments. In the sandbox environment, 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, including spending limits and restrictions on which industries can accept them. This is expected to reduce the need for manual audits, particularly when spending occurs outside standard hours. The new system will also eliminate intermediaries such as card networks, which, according to the ministry, could lead to lower transaction fees for small businesses receiving government payments. This initiative represents the second instance of deposit tokens being used 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, as stated in the report. The ministry plans to expand the program if it demonstrates enhanced control over spending and measurable cost savings.