South Korea to Pilot 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 broader initiative to modernize public fund management. According to local media reports, the ministry has received approval for a pilot program to utilize Treasury funds in the form of digital currency under the 2026 regulatory sandbox program. The approval enables the use of tokenized deposits to cover business promotion expenses, which are currently processed using government purchasing cards. This shift marks a significant change from the long-standing system governed by the Treasury Funds Management Act, which previously mandated card-based payments. In the sandbox environment, agencies will be allowed to operate outside these rules on a limited basis to test innovative methods. Officials anticipate that this change will enhance oversight, as token-based payments can be programmed with predefined conditions, including limits on when funds can be utilized and which industries can accept them. This could lead to a reduction in the need for manual audits, particularly when spending occurs outside standard hours. The system also eliminates intermediaries such as card networks, which the ministry believes could result in lower transaction fees for small businesses receiving government payments. This initiative marks the second instance of deposit tokens being used in Treasury operations, following an earlier pilot project 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. The ministry plans to expand the program if it demonstrates improved control over spending and measurable cost savings.