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 trial of blockchain-based deposit tokens for government expenditure in the fourth quarter, as part of a larger effort to streamline public fund management. According to local media reports, the ministry has received approval for a pilot program to utilize digital currency for Treasury fund expenditure under the 2026 regulatory sandbox initiative. This approval enables the use of tokenized deposits for business promotion expenses, which were previously processed using government-issued purchasing cards. By operating within a sandbox environment, government agencies will be able to test novel approaches outside the constraints of existing regulations. Officials anticipate that this shift will enhance oversight, as token-based payments can be pre-programmed with specific conditions, such as spending limits and designated industries, potentially reducing the need for manual audits. Furthermore, the removal of intermediaries like card networks may lead to lower transaction fees for small businesses receiving government payments. This initiative marks the second instance of deposit token utilization in Treasury operations, following a previous pilot project 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 spending control and significant cost savings.