South Korea to Introduce Blockchain-Based Deposit Tokens for Public Expenditure in Q4

In the fourth quarter, South Korea's Ministry of Economy and Finance is set to launch a pilot program for testing blockchain-based deposit tokens as a means of managing 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 program under the 2026 regulatory sandbox initiative, which will involve using digital currency to disburse Treasury funds. This approval will enable the use of tokenized deposits to cover business promotion expenses, which are currently processed using government purchasing cards. By doing so, the long-standing system governed by the Treasury Funds Management Act, which mandates card-based payments, will be modified. In the sandbox environment, agencies will be allowed to operate outside these rules on a limited basis to test new approaches. Government officials anticipate that this change will enhance oversight, as token-based payments can be programmed with predefined conditions such as spending limits and restrictions on which industries can accept them. This could reduce the need for manual audits, particularly when spending occurs outside regular hours. Additionally, the system eliminates intermediaries such as card networks, which the ministry believes could lead to lower transaction fees for small businesses receiving government payments. This marks the second instance of using deposit tokens in Treasury operations, following an earlier pilot program 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, according to the report. The ministry plans to expand the program if it demonstrates improved control over spending and measurable cost savings.