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 larger effort to modernize the management of public funds. 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 pilot will enable the use of tokenized deposits to cover business promotion expenses, which are currently processed using government purchasing cards. By operating within a sandbox environment, government agencies will be able to test new methods outside of the traditional rules governed by the Treasury Funds Management Act. Officials anticipate that this change will enhance oversight, as token-based payments can be programmed with predefined conditions such as spending limits and restrictions on which industries can accept them, potentially reducing the need for manual audits. The removal of intermediaries like card networks may also lead to lower transaction fees for small businesses receiving government payments. This marks the second instance of deposit tokens being used in Treasury operations, following a previous pilot related to subsidies for electric vehicle-charging infrastructure. The trial is scheduled to take place in Sejong City, with participating firms to be selected through a designated process. If the program yields positive results in terms of enhanced spending control and cost savings, the ministry plans to expand it further.