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 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 the 2026 regulatory sandbox program, allowing it to spend Treasury funds in the form of digital currency. The approved pilot will enable the use of tokenized deposits for business promotion expenses, which are currently processed using government purchasing cards. This change marks a departure from the traditional system governed by the Treasury Funds Management Act, which mandated card-based payments. Within the sandbox environment, government agencies will be permitted to operate outside these rules on a limited basis to test new methods. Officials anticipate that this shift 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. Furthermore, the system eliminates intermediaries like card networks, which the ministry believes could result in lower transaction fees for small businesses receiving government payments. This initiative follows an earlier pilot program that utilized deposit tokens for subsidies related to electric vehicle-charging infrastructure. The trial is scheduled to take place in Sejong City after a selection process for participating firms, and the ministry plans to expand the program if it demonstrates improved control over spending and measurable cost savings.