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

The South Korean Ministry of Economy and Finance is set to launch a pilot program in the fourth quarter to utilize blockchain-based deposit tokens for government expenditure as part of a larger effort to modernize public fund management. According to local media, the ministry has received approval for the pilot under the 2026 regulatory sandbox program, enabling the use of digital currency for Treasury fund expenditure. The approved pilot will allow businesses to receive tokenized deposits for promotional expenses, which are currently processed using government purchasing cards. This change marks a significant shift from the traditional system governed by the Treasury Funds Management Act, which previously required card-based transactions. In the sandbox environment, government agencies will be permitted to test new methods outside of the existing regulations on a limited basis. Authorities anticipate that the new system will enhance oversight, as token-based payments can be programmed with predefined conditions such as spending limits and industry-specific usage. This could lead to a reduction in manual audits, particularly for transactions that occur outside standard hours. Furthermore, the system eliminates intermediaries like card networks, which could result in 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 subsidies related to 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 improved control over expenditure and significant cost savings.