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

As part of a larger effort to modernize public fund management, 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 secured approval for the pilot under the 2026 regulatory sandbox program, which will enable the use of digital currency to disburse Treasury funds. This initiative will allow business promotion expenses, currently processed using government purchasing cards, to be paid using tokenized deposits, thus deviating from the traditional system governed by the Treasury Funds Management Act. In the sandbox environment, government agencies will be permitted to operate outside the existing regulations on a limited basis to test innovative approaches. Government officials anticipate that this change will enhance oversight, as token-based payments can be programmed with predefined conditions, including restrictions on when and how funds can be utilized, as well as which industries can accept them. This is expected to reduce the need for manual audits, particularly in cases where spending occurs outside regular hours. Furthermore, the system eliminates intermediaries such as card networks, which, according to the ministry, could 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 an earlier pilot project related to subsidies for electric vehicle-charging infrastructure. The trial is scheduled to take place in Sejong City after 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 measurable cost savings.