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 modernize the management of public funds. According to local media reports, the ministry has obtained approval for the pilot project under a 2026 regulatory sandbox program, which will enable the use of digital currency for Treasury fund expenditures. This development will allow business promotion expenses, currently processed using government purchasing cards, to be paid using tokenized deposits, thereby altering a long-standing system governed by the Treasury Funds Management Act. The new system is expected to enhance oversight, as token-based payments can be programmed with predefined conditions, including spending limits and industry-specific usage. This is anticipated to reduce the need for manual audits, particularly when spending occurs outside standard hours. Furthermore, the removal of intermediaries such as card networks is expected to lower transaction fees for small businesses receiving government payments. This trial marks the second instance of deposit tokens being used in Treasury operations, following an earlier pilot project related to subsidies for electric vehicle-charging infrastructure. The trial will be conducted in Sejong City, following a selection process for participating firms, with plans to expand the program if it demonstrates improved control over spending and measurable cost savings.