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 broader initiative to modernize public fund management. According to local media reports, the ministry has received approval for the pilot under the 2026 regulatory sandbox program, which will enable the use of digital currency for Treasury fund expenditures. The pilot program will replace the traditional government purchasing card system for business promotion expenses with tokenized deposits, marking a significant shift from the long-standing Treasury Funds Management Act. By operating in a sandbox environment, government agencies will be able to test new methods outside of the existing regulatory framework on a limited basis. Officials anticipate that the new system will enhance oversight, as token-based payments can be programmed with specific conditions such as spending limits and industry restrictions. This is expected to reduce the need for manual audits, particularly for spending that occurs outside regular hours. The removal of intermediaries, such as card networks, is also expected to lower transaction fees for small businesses receiving government payments. This pilot program marks the second instance of deposit tokens being used in Treasury operations, following an earlier trial related to subsidies for electric vehicle-charging infrastructure. The trial will be conducted in Sejong City, following 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.