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 trial of blockchain-based deposit tokens for government expenditure in the fourth quarter, 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 the 2026 regulatory sandbox program, allowing it to utilize digital currency for Treasury fund spending. The approved pilot enables the use of tokenized deposits for business promotion expenses, which are currently processed using government purchasing cards. This development marks a significant shift from the long-standing system governed by the Treasury Funds Management Act, which previously required card-based payments. In the sandbox environment, government agencies will be able to operate outside these rules on a limited basis to test new methods. Government officials anticipate that this change will enhance oversight, as token-based payments can be programmed with predefined conditions such as spending limits and industry restrictions. This could lead to a reduction in manual audits, particularly for spending that occurs outside standard hours. Additionally, the system removes intermediaries such as card networks, which could result in lower transaction fees for small businesses receiving government payments, according to the ministry. This trial 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. The ministry plans to expand the program if it demonstrates improved control over spending and achieves measurable cost savings.