Blockchain Deposit Tokens to be Piloted for Government Expenditure in South Korea

The South Korean Ministry of Economy and Finance is set to launch a pilot program in the fourth quarter to test the use of blockchain-based deposit tokens for government expenditure, as part of a larger effort to modernize public fund management. According to local media reports, the pilot program has been approved under the 2026 regulatory sandbox initiative, allowing for the use of digital currency to disburse Treasury funds. This will enable business promotion expenses, currently processed using government purchasing cards, to be paid using tokenized deposits, thereby altering a long-standing system governed by the Treasury Funds Management Act. By operating in a sandbox environment, agencies will be able to test new methods outside of the existing rules on a limited basis. 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, potentially reducing the need for manual audits. The removal of intermediaries, including card networks, is also expected to lower transaction fees for small businesses receiving government payments. This pilot program marks the second instance of deposit tokens being used in Treasury operations, following an earlier trial 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 to expand the program if it demonstrates improved control over spending and measurable cost savings.