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

In an effort to modernize the management of public funds, South Korea's Ministry of Economy and Finance is set to launch a trial of blockchain-based deposit tokens for government expenditure in the fourth quarter. According to local media reports, the ministry has received approval for a pilot program to utilize digital currency for Treasury fund expenditure 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 operating within a sandbox environment, agencies will be able to bypass traditional rules governed by the Treasury Funds Management Act, which previously mandated card-based payments, and test new methods on a limited scale. Government officials anticipate that this shift will enhance oversight, as token-based payments can be pre-programmed with specific conditions, including spending limits and industry restrictions. This could lead to a reduction in manual audits, particularly for expenditures that occur outside regular working hours. The new system also eliminates intermediaries, such as card networks, which could result in lower transaction fees for small businesses receiving government payments, according to the ministry. This marks the second instance of deposit tokens being utilized in Treasury operations, following a previous pilot program related to subsidies for electric vehicle-charging infrastructure. The trial is scheduled to take place in Sejong City, following a selection process for participating firms, as stated in the report. The ministry plans to expand the program if it demonstrates improved control over expenditure and yields measurable cost savings.