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 pilot program in the fourth quarter, utilizing blockchain-based deposit tokens for government expenditure as part of a broader initiative to modernize public fund management. According to local media reports, the ministry has received approval for the pilot under the 2026 regulatory sandbox program, enabling the use of digital currency for Treasury fund expenditure. The approved pilot will replace government purchasing cards with tokenized deposits for business promotion expenses. By operating outside the constraints of the Treasury Funds Management Act, which previously mandated card-based payments, agencies will be able to test new methods in a controlled environment. 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 acceptance. This is anticipated to reduce the need for manual audits, particularly for spending that occurs outside standard hours. Additionally, the removal of intermediaries such as card networks is expected to lower transaction fees for small businesses receiving government payments. This marks the second instance of deposit tokens being used in Treasury operations, following a previous 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, with plans for expansion if the program demonstrates improved control over spending and measurable cost savings.