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 broader initiative to modernize public fund management. According to local media reports, the pilot program has been approved under the 2026 regulatory sandbox initiative, enabling the use of digital currency for Treasury fund disbursements. This move will replace the traditional government purchasing card system for business promotion expenses with tokenized deposits. By operating outside the conventional rules governed by the Treasury Funds Management Act, government agencies will be able to test innovative methods in a controlled environment. The introduction of token-based payments is expected to enhance oversight, as these 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 regular hours. Furthermore, the removal of intermediaries like card networks may result in lower transaction fees for small businesses receiving government payments. Following a previous pilot program for electric vehicle-charging infrastructure subsidies, this marks the second instance of deposit tokens being used in Treasury operations. The trial is scheduled to take place in Sejong City, with participating firms to be selected through a formal process. If the program demonstrates improved control over expenditure and significant cost savings, the ministry plans to expand it further.