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

As part of a larger 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, testing the use of blockchain-based deposit tokens for government expenditures. According to local media reports, the ministry has received approval for the pilot under the 2026 regulatory sandbox program, enabling the use of digital currency for Treasury fund expenditures. The pilot will replace the traditional government purchasing card system with tokenized deposits for business promotion expenses, marking a significant departure from the long-standing Treasury Funds Management Act. By operating within a sandbox environment, agencies will be able to test new methods outside of the existing regulatory framework on a limited basis. Officials anticipate that the new system will enhance oversight, as token-based payments can be programmed with predefined conditions such as spending limits and industry-specific acceptance. This could minimize the need for manual audits, particularly for outside-of-hours transactions. Additionally, the removal of intermediaries like card networks may lead to lower transaction fees for small businesses receiving government payments. This initiative follows an earlier pilot program that utilized deposit tokens for electric vehicle-charging infrastructure subsidies, marking the second instance of their use in Treasury operations. 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.