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

In the fourth quarter, South Korea's Ministry of Economy and Finance is set to launch a pilot program for using blockchain-based deposit tokens in government spending, as part of a larger effort to modernize public fund management. According to local reports, the ministry has received approval for the pilot under a 2026 regulatory sandbox initiative, allowing it to test the use of digital currency for Treasury fund expenditure. By tokenizing deposits, the program seeks to replace the traditional government purchasing card system for business promotion expenses. This shift is expected to enhance oversight, as token-based payments can be programmed with specific conditions such as spending limits and restrictions on eligible industries. By doing so, the need for manual audits may decrease, particularly for spending that occurs outside regular hours. Furthermore, the removal of intermediaries like card networks could lead to lower transaction fees for small businesses receiving government payments. Following a previous pilot for electric vehicle-charging infrastructure subsidies, this initiative marks the second instance of deposit tokens being used in Treasury operations. The trial is scheduled to take place in Sejong City, with plans for expansion if the program demonstrates improved spending control and significant cost savings.