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 spending, as part of a larger effort to modernize public fund management. According to local media reports, the ministry has secured approval for the pilot under a 2026 regulatory sandbox initiative, which enables 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. By operating within a sandbox environment, government agencies will be able to temporarily bypass existing regulations, such as the Treasury Funds Management Act, to test innovative methods. Officials anticipate that this shift will enhance oversight, as token-based payments can be pre-programmed with specific conditions, including spending limits and industry restrictions. This could significantly reduce the need for manual audits, particularly for transactions that occur outside regular hours. Additionally, the removal of intermediaries like card networks is expected to lower transaction fees for small businesses receiving government payments. This initiative marks the second instance of deposit tokens being used in Treasury operations, following a previous pilot related 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 separate process. If the program demonstrates improved spending control and cost savings, the ministry plans to expand it further.