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 trial of blockchain-based deposit tokens for government spending in the fourth quarter. According to local media reports, the ministry has received approval for the pilot under a 2026 regulatory sandbox program, enabling the use of digital currency for Treasury fund expenditure. The initiative aims to replace traditional government purchasing cards with tokenized deposits for business promotion expenses. By operating in a sandbox environment, agencies can temporarily bypass existing rules governed by the Treasury Funds Management Act, which previously required card-based payments. The introduction of token-based payments is expected to enhance oversight, as they can be programmed with predefined conditions such as spending limits and industry-specific acceptance. This could minimize the need for manual audits, particularly for spending that occurs outside standard hours. Additionally, the removal of intermediaries like card networks may lead to lower transaction fees for small businesses receiving government payments. Following a previous pilot for electric vehicle-charging infrastructure subsidies, this marks the second application of deposit tokens in Treasury operations. The trial is scheduled to take place in Sejong City, with participating firms to be selected through a formal process. If the program demonstrates improved spending control and significant cost savings, the ministry plans to expand it further.