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 pilot program has been approved under the 2026 regulatory sandbox initiative, enabling the use of digital currency for Treasury fund expenditures. This move will replace the traditional government purchasing card system for business promotion expenses with tokenized deposits. By operating outside the constraints of the Treasury Funds Management Act, agencies will be able to test new methods in a controlled environment. The introduction of token-based payments is expected to enhance oversight, as these can be programmed with specific conditions such as spending limits and industry restrictions. This could lead to a reduction in manual audits, particularly for transactions that occur outside regular hours. Furthermore, the removal of intermediaries like card networks may result in lower transaction fees for small businesses receiving government payments. Following a successful pilot for electric vehicle-charging infrastructure subsidies, this marks the second instance of deposit tokens being used in Treasury operations. The trial is scheduled to take place in Sejong City, with plans for expansion if the program demonstrates improved spending control and significant cost savings.