South Korea to Introduce Blockchain-Based Deposit Tokens for Public 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. According to local reports, the ministry has received approval for the pilot under the 2026 regulatory sandbox program, which enables the use of digital currency for Treasury fund expenditures. The approved pilot will allow businesses to utilize tokenized deposits for promotional expenses, which are currently processed using government-issued purchasing cards. This move marks a significant shift from the traditional system governed by the Treasury Funds Management Act, which previously mandated card-based payments. In the sandbox environment, government agencies will be permitted to operate outside these rules on a limited basis to test innovative methods. Government 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 acceptance criteria. This could lead to a reduction in manual audits, particularly for expenditures that occur outside regular hours. By removing intermediaries like card networks, the ministry expects that transaction fees for small businesses receiving government payments will be lower. This is the second instance of deposit tokens being used in Treasury operations, following an earlier pilot 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. If the program demonstrates improved control over expenditure and significant cost savings, the ministry plans to expand it.