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 pilot program in the fourth quarter to test the use of blockchain-based deposit tokens for government spending. According to local media reports, the pilot program has been approved under the 2026 regulatory sandbox initiative, enabling the use of digital currency to disburse Treasury funds. This move will allow businesses to utilize tokenized deposits to cover promotional expenses, which are currently processed using government purchasing cards. By operating within a sandbox environment, government agencies will be able to temporarily bypass traditional rules governed by the Treasury Funds Management Act, which previously required card-based payments. 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 restrictions. This could lead to a reduction in manual audits, particularly for spending that occurs outside regular hours. Additionally, the removal of intermediaries like card networks may result in lower transaction fees for small businesses receiving government payments. This pilot program marks the second instance of deposit tokens being used in Treasury operations, following an earlier trial related to subsidies for electric vehicle-charging infrastructure. The trial is scheduled to take place in Sejong City, with participating firms to be selected through a formal process. If the program yields positive results in terms of enhanced spending control and cost savings, the ministry plans to expand it further.