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

As part of a larger effort to modernize the management of public funds, 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 received approval for the pilot under the 2026 regulatory sandbox program, allowing for the use of digital currency to disburse Treasury funds. The initiative enables the use of tokenized deposits to cover business promotion expenses, which are currently processed using government purchasing cards. This development marks a shift away from the traditional system governed by the Treasury Funds Management Act, which previously required card-based payments. Within the sandbox environment, government agencies will be permitted to operate outside these rules on a limited basis to test innovative approaches. Authorities anticipate that the new system will enhance oversight, as token-based payments can be programmed with predefined conditions such as spending limits and restrictions on which industries can utilize them. This could lead to a reduction in manual audits, particularly when spending occurs outside regular hours. Moreover, the system eliminates intermediaries like card networks, which, according to the ministry, may result in lower transaction fees for small businesses receiving government payments. This trial follows an earlier pilot program that utilized deposit tokens for subsidies related to 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 spending and yields measurable cost savings.