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 trial of blockchain-based deposit tokens for government expenditure in the fourth quarter, as part of a larger effort to modernize public fund management. According to local media reports, the ministry has received approval for the pilot under the 2026 regulatory sandbox program, allowing for the use of digital currency to disburse Treasury funds. This move will replace the traditional government purchasing card system for business promotion expenses with tokenized deposits. By operating within the sandbox environment, agencies will be able to test new methods outside the constraints of the Treasury Funds Management Act. Officials anticipate that this change will enhance oversight, as token-based payments can be programmed with predefined conditions, such as spending limits and industry-specific usage. This could lead to a reduction in manual audits, particularly for spending that occurs outside regular hours. Additionally, the removal of intermediaries like card networks may 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 a previous pilot related to subsidies for electric vehicle-charging infrastructure. The trial is scheduled to take place in Sejong City, following a selection process for participating firms, with plans for expansion if the program demonstrates improved control over spending and significant cost savings.