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 broader initiative to streamline the management of public funds. According to local media reports, the ministry has obtained approval for a pilot program to utilize digital currency for Treasury fund expenditures under the 2026 regulatory sandbox program. This approval enables the use of tokenized deposits for business promotion expenses, which are currently processed using government purchasing cards. The new system modifies the long-standing framework governed by the Treasury Funds Management Act, which previously required card-based payments. Within the sandbox environment, agencies will be permitted to operate outside these rules on a limited basis to test novel methods. Officials anticipate that the new system will enhance oversight, as token-based payments can be programmed with predefined conditions, including restrictions on when funds can be utilized and which industries can accept them. This could reduce the need for manual audits, particularly when spending occurs outside standard hours. The system also eliminates intermediaries such as card networks, which the ministry believes could 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, as stated in the report. The ministry plans to expand the program if it demonstrates enhanced control over expenditure and measurable cost savings.