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 initiative to modernize public fund management. According to local media reports, the pilot project, which involves using digital currency to disburse Treasury funds, has been approved under the 2026 regulatory sandbox program. This approval enables the use of tokenized deposits for business promotion expenses, which are currently processed using government purchasing cards. By operating in a sandbox environment, agencies will be able to test new methods outside the constraints of the existing Treasury Funds Management Act, which previously mandated card-based payments. The introduction of token-based payments is expected to enhance oversight, as these payments can be programmed with predefined conditions such as spending limits and industry-specific usage, potentially reducing the need for manual audits. The removal of intermediaries, including card networks, is also expected to lower transaction fees for small businesses receiving government payments. This trial follows an earlier pilot project that utilized deposit tokens for electric vehicle-charging infrastructure subsidies. The upcoming trial will take place in Sejong City, following a selection process for participating firms, and the ministry plans to expand the program if it demonstrates improved control over expenditure and measurable cost savings.