South Korea to Introduce Blockchain-Based Deposit Tokens for Government Expenditure in Q4

As part of a broader initiative to modernize public fund management, South Korea's Ministry of Economy and Finance is set to launch a pilot program in the fourth quarter, testing the use of blockchain-based deposit tokens for government spending. According to local media reports, the ministry has received approval for the pilot under a 2026 regulatory sandbox program, enabling the use of digital currency for Treasury fund expenditures. The approved pilot will allow for the replacement of traditional government purchasing cards with tokenized deposits for business promotion expenses. This move marks a significant shift from the long-standing system governed by the Treasury Funds Management Act, which previously mandated card-based payments. Within the sandbox environment, agencies will be permitted 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 predefined conditions such as spending limits and designated industries. This is expected to reduce the need for manual audits, particularly in cases where spending occurs outside standard hours. Furthermore, the removal of intermediaries like card networks is expected to lower transaction fees for small businesses receiving government payments, according to the ministry. This initiative follows an earlier pilot program that utilized deposit tokens for electric vehicle-charging infrastructure subsidies. The trial is scheduled to take place in Sejong City, following a selection process for participating firms, as stated in the report. The ministry plans to expand the program if it demonstrates improved control over spending and measurable cost savings.