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 pilot program in the fourth quarter to test the use of blockchain-based deposit tokens for government expenditure as part of a larger effort to modernize public fund management. According to local media, the ministry has received approval for the pilot under the 2026 regulatory sandbox program, allowing it to use digital currency to disburse Treasury funds. The approved pilot will enable the use of tokenized deposits to cover business promotion expenses, which are currently processed using government purchasing cards. This move marks a significant change from the traditional system governed by the Treasury Funds Management Act, which previously required card-based payments. The regulatory sandbox environment will allow agencies to test new methods outside of these rules on a limited basis. Government officials anticipate that this change will enhance oversight and control. Since token-based payments can be programmed with specific conditions, including usage limits and industry restrictions, the need for manual audits, particularly outside standard working hours, is likely to decrease. Furthermore, the removal of intermediaries such as card networks is expected to lower transaction fees for small businesses receiving government payments, according to the ministry. This is 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 after a selection process for participating firms, as stated in the report. If the program demonstrates improved control over spending and significant cost savings, the ministry plans to expand it.