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

In the fourth quarter, South Korea's Ministry of Economy and Finance is set to launch a pilot program for testing blockchain-based deposit tokens as a means of managing 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 for Treasury fund expenditure. This approval will allow businesses to utilize tokenized deposits for promotional expenses, which are currently processed using government purchasing cards. The introduction of this system marks a significant shift from the long-standing Treasury Funds Management Act, which previously mandated card-based payments. Within the sandbox environment, government agencies will be permitted to operate outside these regulations on a limited basis to test innovative methods. Government officials anticipate that this change will enhance oversight, as token-based payments can be programmed with predefined conditions such as time limits and industry-specific acceptance criteria. This could lead to a reduction in manual audits, particularly for spending that occurs outside regular working hours. Furthermore, 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 utilized in Treasury operations, following a previous pilot program related to subsidies for electric vehicle-charging infrastructure. The trial is scheduled to take place in Sejong City, following 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 measurable cost savings.