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 larger effort to modernize public fund management. According to local media reports, the ministry has secured approval for the pilot project under the 2026 regulatory sandbox program, which will enable the use of digital currency for Treasury fund spending. The approved pilot will replace government purchasing cards with tokenized deposits for business promotion expenses. By operating outside the existing Treasury Funds Management Act, which previously required card-based payments, agencies will be able to test new methods in a sandbox environment. Officials anticipate that the introduction of token-based payments, which can be programmed with specific conditions such as spending limits and industry restrictions, will enhance oversight and reduce the need for manual audits. Additionally, the removal of intermediaries like card networks is expected 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 a previous pilot project related to subsidies for electric vehicle-charging infrastructure. The trial is scheduled to take place in Sejong City, with plans for expansion if it yields improved spending control and significant cost savings.