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

As part of a broader effort to modernize public fund management, South Korea's 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 spending. According to local media reports, the ministry has received approval for the pilot under a 2026 regulatory sandbox program, which will enable the use of digital currency to spend Treasury funds. The program aims to replace the traditional government purchasing card system with tokenized deposits for business promotion expenses. By operating in a sandbox environment, agencies will be able to test new methods outside the constraints of the existing Treasury Funds Management Act. The introduction of token-based payments is expected to enhance oversight, as these 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 spending that occurs outside regular hours. Furthermore, the removal of intermediaries such as card networks is anticipated to lower transaction fees for small businesses receiving government payments. Following a previous pilot program for electric vehicle-charging infrastructure subsidies, this marks the second instance of deposit tokens being used in Treasury operations. The trial is scheduled to take place in Sejong City, with participating firms to be selected through a rigorous process. If the program demonstrates improved control over spending and yields significant cost savings, the ministry plans to expand it further.