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 larger effort to modernize 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 initiative. This approval enables the use of tokenized deposits for business promotion expenses, which are currently processed using government purchasing cards. By adopting this new system, officials anticipate enhanced oversight, as token-based payments can be programmed with predefined conditions, such as spending limits and industry-specific usage. This could lead to a reduction in manual audits, particularly in cases where spending occurs outside regular hours. Furthermore, the elimination of intermediaries, including card networks, may result in lower transaction fees for small businesses receiving government payments. This trial, scheduled to take place in Sejong City, 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 ministry plans to expand the program if it demonstrates improved control over expenditure and yields measurable cost savings.