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

In the fourth quarter, South Korea's Ministry of Economy and Finance is set to launch a pilot program testing 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 for Treasury fund expenditure. The approved pilot will allow business promotion expenses, currently processed via government purchasing cards, to be paid using tokenized deposits, thereby altering a long-standing system governed by the Treasury Funds Management Act that required card-based payments. Within the sandbox environment, agencies will be permitted to operate outside these rules on a limited basis to test innovative methods. Officials anticipate that this change will enhance oversight, as token-based payments can be programmed with predefined conditions, including spending limits and restrictions on which industries can accept them, potentially reducing the need for manual audits, particularly when spending occurs outside standard hours. Additionally, the system eliminates intermediaries, such as card networks, which the ministry believes could lead to lower transaction fees for small businesses receiving government payments. This marks 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, with plans to expand the program if it demonstrates improved control over spending and measurable cost savings.