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

In the fourth quarter, South Korea's Ministry of Economy and Finance is set to launch a trial of blockchain-based deposit tokens for government expenditure as part of a larger effort to modernize public fund management. The ministry has secured approval for a pilot program to utilize digital currency for Treasury fund expenditure under the 2026 regulatory sandbox initiative, as reported by local media. This pilot will enable the use of tokenized deposits for business promotion expenses, which are currently processed using government purchasing cards. By doing so, it will alter a long-standing system governed by the Treasury Funds Management Act, which traditionally required card-based payments. Within the sandbox environment, agencies will be permitted to operate outside these regulations on a limited basis to test innovative methods. Officials anticipate that this change will enhance oversight, as token-based payments can be programmed with predefined conditions such as spending limits and industry-specific acceptance. This could lead to a reduction in manual audits, particularly when spending 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 marks the second instance of deposit tokens being used in Treasury operations, following an earlier 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, according to the report. The ministry plans to expand the program if it demonstrates improved control over expenditure and measurable cost savings.