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 ministry has secured approval for a pilot program to utilize digital currency for Treasury fund expenditure under the 2026 regulatory sandbox program. This approval enables the use of tokenized deposits for business promotion expenses, which are currently processed using government-issued purchasing cards. The introduction of this system marks a significant departure from the longstanding Treasury Funds Management Act, which mandated the use of card-based payments. Within the sandbox environment, agencies will be allowed to operate outside these regulations on a limited basis to test innovative methods. Officials anticipate that this change will enhance oversight, as token-based payments can be programmed with predefined conditions, including restrictions on when funds can be utilized and which industries can accept them. This could minimize the need for manual audits, particularly when expenditure occurs outside standard working hours. Additionally, the system eliminates intermediaries such as card networks, which the ministry believes could lead to lower transaction fees for small businesses receiving government payments. This represents 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, following a selection process for participating firms, as stated in the report. The ministry plans to expand the program if it demonstrates enhanced control over expenditure and measurable cost savings.