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

The South Korean Ministry of Economy and Finance is set to launch a pilot program in Q4 to test the use of blockchain-based deposit tokens for government expenditure as part of its efforts to modernize public fund management. According to local media reports, the ministry has received approval under the 2026 regulatory sandbox program to conduct the pilot, which will involve using digital currency to spend Treasury funds. The program aims to replace the traditional government purchasing card system with tokenized deposits for business promotion expenses. By utilizing token-based payments, which can be programmed with specific conditions such as spending limits and industry restrictions, the government expects to enhance oversight and reduce the need for manual audits. Additionally, the removal of intermediaries like card networks is anticipated to lower transaction fees for small businesses receiving government payments. This initiative 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 plans for expansion if the program demonstrates improved spending control and cost savings.