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 to test the use of blockchain-based deposit tokens for government spending, as part of a larger effort to streamline public fund management. According to local media reports, the ministry has received approval for the pilot under the 2026 regulatory sandbox program, which will enable the use of digital currency to disburse Treasury funds. The program will replace the traditional government purchasing card system for business promotion expenses with tokenized deposits, thereby deviating from the long-standing Treasury Funds Management Act. By operating in a sandbox environment, agencies will be able to test new methods outside of the existing rules. The introduction of token-based payments is expected to enhance oversight, as these payments can be programmed with specific conditions such as spending limits and industry restrictions. This could lead to a reduction in manual audits, particularly for spending that occurs outside of standard hours. Furthermore, the removal of intermediaries like card networks is anticipated 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 related to subsidies for electric vehicle-charging infrastructure. The trial is scheduled to take place in Sejong City, and the ministry plans to expand the program if it demonstrates improved control over spending and yields measurable cost savings.