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 pilot program in the fourth quarter to test the use of blockchain-based deposit tokens for 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 the 2026 regulatory sandbox program, which will enable the use of digital currency to spend Treasury funds. The approved pilot will allow business promotion expenses, currently processed using government purchasing cards, to be paid using tokenized deposits, thus altering the long-standing system governed by the Treasury Funds Management Act that required card-based payments. In the sandbox environment, agencies will be able to test new methods outside the existing rules on a limited basis. Officials anticipate that the 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, especially outside standard hours. The system also eliminates intermediaries like card networks, which, according to the ministry, could lead 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 an earlier pilot 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 per the report. The ministry plans to expand the program if it demonstrates improved control over spending and measurable cost savings.