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

As part of a comprehensive effort to modernize public fund management, South Korea's Ministry of Economy and Finance is set to launch a pilot program in the fourth quarter, utilizing blockchain-based deposit tokens for government expenditure. According to local media reports, the ministry has obtained approval for the pilot under the 2026 regulatory sandbox program, enabling the use of digital currency for Treasury fund expenditure. This development allows for the substitution of traditional government purchasing cards with tokenized deposits for business promotion expenses. By operating within a sandbox environment, government agencies can temporarily bypass the constraints of the Treasury Funds Management Act, which previously mandated card-based payments. The introduction of token-based payments is expected to enhance oversight, as these payments can be programmed with specific conditions, including spending limits and industry restrictions. This, in turn, could reduce the necessity for manual audits, particularly in cases where spending occurs outside regular hours. Furthermore, the removal of intermediaries, such as card networks, is anticipated to lower transaction fees for small businesses receiving government payments. This initiative marks the second instance of deposit tokens being utilized 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 potential expansion if the program demonstrates improved control over expenditure and notable cost savings.