South Korea to Introduce Blockchain-Based Deposit Tokens for Public 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 larger effort to modernize public fund management. According to local reports, the ministry has secured approval for a pilot program to utilize digital currency for Treasury fund spending under the 2026 regulatory sandbox initiative. This development enables the use of tokenized deposits for business promotion expenses, which were previously processed using government purchasing cards. By introducing token-based payments, officials anticipate enhanced oversight, as these payments can be pre-programmed with specific conditions, such as spending limits and industry restrictions. This could significantly reduce the need for manual audits, particularly for transactions occurring outside regular hours. Furthermore, the removal of intermediaries like card networks may lead to lower transaction fees for small businesses receiving government payments. This initiative marks the second instance of deposit token utilization in Treasury operations, following an earlier 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 for potential expansion if the program demonstrates improved spending control and cost savings.