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 effort to streamline public fund management. According to local media reports, the ministry has secured approval for the pilot project under the 2026 regulatory sandbox program, which enables the use of digital currency to disburse Treasury funds. The initiative will allow businesses to receive payments for promotional expenses via tokenized deposits, replacing the traditional government purchasing card system. By operating within a sandbox environment, government agencies will be able to temporarily bypass existing regulations governed by the Treasury Funds Management Act, which currently mandates card-based payments. Officials anticipate that the new system will enhance oversight, as token-based payments can be pre-programmed with specific conditions such as spending limits and industry restrictions. This is expected to reduce the need for manual audits, particularly in cases where spending occurs outside regular hours. Furthermore, the removal of intermediaries like card networks is expected to lower transaction fees for small businesses receiving government payments. This marks the second instance of deposit tokens being utilized in Treasury operations, following a previous pilot project related to subsidies for electric vehicle charging infrastructure. The trial is scheduled to take place in Sejong City, following a selection process for participating firms, with plans to expand the program if it demonstrates improved spending control and significant cost savings.