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

As part of a broader effort to modernize public fund management, South Korea's Ministry of Economy and Finance is set to launch a pilot program in the fourth quarter, testing the use of blockchain-based deposit tokens for government spending. According to local media reports, the pilot program, which involves spending Treasury funds in the form of digital currency, has been approved under the 2026 regulatory sandbox program. This approval enables the use of tokenized deposits to cover business promotion expenses, which are currently processed using government purchasing cards. By altering the long-standing system governed by the Treasury Funds Management Act, which previously required card-based payments, agencies will be allowed to operate outside these rules on a limited basis to test new methods within the sandbox environment. Officials anticipate that this change will enhance oversight, as token-based payments can be programmed with specific conditions such as spending limits and industry restrictions. This could lead to a reduction in manual audits, particularly for spending that occurs outside standard hours. The removal of intermediaries, including card networks, is expected to lower transaction fees for small businesses receiving government payments, according to the ministry. This initiative marks the second instance of deposit tokens being used in Treasury operations, following an earlier pilot program 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. If the program demonstrates stronger spending control and measurable cost savings, the ministry plans to expand it.