South Korea Plans Blockchain-Based Deposit Token Trial for Government Expenditure

In the fourth quarter, South Korea's Ministry of Economy and Finance is set to launch a pilot program for testing blockchain-based deposit tokens in government spending as part of a larger effort to streamline public fund management. According to local reports, the ministry has received approval for the pilot under the 2026 regulatory sandbox program, allowing it to use digital currency for Treasury fund expenditure. This move enables the use of tokenized deposits for business promotion expenses, which are currently processed using government purchasing cards. By operating within a sandbox environment, agencies can temporarily bypass the rules governed by the Treasury Funds Management Act, which traditionally required card-based payments. The introduction of token-based payments is expected to enhance oversight, as these payments can be programmed with specific conditions such as spending limits and industry restrictions. This could lead to a reduction in manual audits, particularly for spending that occurs outside standard hours. Additionally, the removal of intermediaries like card networks may result in lower transaction fees for small businesses receiving government payments. This pilot program marks the second instance of deposit tokens being used in Treasury operations, following an earlier trial 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 for expansion if the program demonstrates improved control over expenditure and significant cost savings.