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 to test the use of 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 received approval for the pilot under a 2026 regulatory sandbox initiative, which will enable the use of digital currency to disburse Treasury funds. The approved pilot will allow businesses to utilize tokenized deposits to cover promotional expenses, which are currently processed using government-issued purchasing cards. This development marks a significant shift from the traditional system governed by the Treasury Funds Management Act, which previously required card-based payments. In the sandbox environment, government agencies will be permitted to operate outside these rules on a limited basis to test innovative approaches. Government officials anticipate that this change will enhance oversight and control. Since token-based payments can be programmed with predefined conditions, including time limits and industry-specific restrictions, the need for manual audits is likely to decrease, particularly in cases where spending occurs outside regular working hours. Moreover, the removal of intermediaries such as card networks is expected to lower transaction fees for small businesses receiving government payments, according to the ministry. 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. If the program demonstrates improved control over spending and yields measurable cost savings, the ministry plans to expand it further.