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

As part of its efforts to modernize public fund management, South Korea's Ministry of Economy and Finance is set to launch a trial of blockchain-based deposit tokens for government expenditure in the fourth quarter. The pilot program, which has been approved under the 2026 regulatory sandbox initiative, will enable the use of digital currency for Treasury fund expenditures, local media outlets have reported. The approval will allow for the use of tokenized deposits to cover business promotion expenses, which are currently processed using government purchasing cards. This move marks a significant shift away from the traditional system governed by the Treasury Funds Management Act, which has long required card-based payments. Within the sandbox environment, government agencies will be permitted to operate outside these rules on a limited basis to test innovative approaches. According to officials, the introduction of token-based payments is expected to enhance oversight, as these payments can be programmed with predefined conditions, including limitations 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 in instances where spending occurs outside standard hours. Furthermore, the removal of intermediaries, such as card networks, is expected to result in lower transaction fees for small businesses that receive government payments. This trial follows an earlier pilot program that utilized deposit tokens for subsidies related to electric vehicle-charging infrastructure. The trial is scheduled to take place in Sejong City, following a selection process for participating firms, as stated in the report. If the program demonstrates improved control over expenditure and measurable cost savings, the ministry plans to expand it.