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 to test the use of blockchain-based deposit tokens for government spending. According to local media reports, the ministry has received approval for the pilot under a 2026 regulatory sandbox initiative, which will enable the use of digital currency for Treasury fund expenditures. The approved pilot will allow businesses to utilize tokenized deposits for promotional expenses, which are currently processed using government purchasing cards. This development marks a significant shift from the traditional system governed by the Treasury Funds Management Act, which previously required card-based transactions. By operating in a sandbox environment, government agencies will be able to test new methods outside of the existing regulations on a limited basis. Officials anticipate that the new system will enhance oversight, as token-based payments can be programmed with predefined conditions such as spending limits and industry restrictions. This is expected to reduce the need for manual audits, particularly when spending occurs outside regular hours. Additionally, the system eliminates intermediaries like card networks, which could lead to lower transaction fees for small businesses receiving government payments. This is the second instance of deposit tokens being used in Treasury operations, following a previous pilot 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, and the ministry plans to expand the program if it demonstrates improved control over spending and significant cost savings.