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 trial of blockchain-based deposit tokens for government expenditure in the fourth quarter, as part of a broader initiative to modernize the management of public funds. According to local media reports, the ministry has received approval for the pilot under a 2026 regulatory sandbox program, which will enable the use of digital currency for Treasury fund expenditures. The pilot will replace the traditional government purchasing card system with tokenized deposits for business promotion expenses. This shift marks a significant change from the long-standing Treasury Funds Management Act, which previously mandated card-based payments. By operating in a sandbox environment, government agencies will be able to test new methods outside of the existing regulatory framework. Officials anticipate that the introduction of token-based payments will enhance oversight, as these payments can be programmed with predefined conditions such as spending limits and industry-specific restrictions. This could lead to a reduction in manual audits, particularly for spending that occurs outside standard hours. Furthermore, the removal of intermediaries like card networks is expected to lower transaction fees for small businesses receiving government payments. This trial follows an earlier pilot program that utilized deposit tokens for subsidies related to electric vehicle-charging infrastructure. The upcoming trial will take place 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 notable cost savings.