South Korea to Pilot Blockchain-Based Deposit Tokens for Government Expenditure

As part of its efforts to modernize public fund management, the South Korean 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 the 2026 regulatory sandbox program, which will enable the use of digital currency for Treasury fund expenditures. The program aims to replace traditional government purchasing cards with tokenized deposits for business promotion expenses, thus altering the existing system governed by the Treasury Funds Management Act. By operating in a sandbox environment, agencies will be able to test new methods outside the conventional rules. Officials anticipate that this shift will enhance oversight, as token-based payments can be programmed with specific conditions, such as spending limits and industry restrictions, potentially reducing the need for manual audits. Furthermore, the removal of intermediaries like card networks is expected to lower transaction fees for small businesses receiving government payments. This pilot follows an earlier trial of deposit tokens in Treasury operations, which was tied to subsidies for electric vehicle-charging infrastructure. The trial is scheduled to take place in Sejong City, with participating firms to be selected through a designated process. If the program demonstrates improved control over spending and significant cost savings, the ministry plans to expand it.