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 pilot program in the fourth quarter to utilize blockchain-based deposit tokens for government expenditures, as part of a larger effort to revolutionize public fund management. According to local media reports, the ministry has secured approval for the pilot under the 2026 regulatory sandbox initiative, which will enable 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 development marks a significant departure from the traditional system governed by the Treasury Funds Management Act, which mandated card-based transactions. In the sandbox environment, government agencies will be permitted to operate outside these regulations on a limited basis to test innovative approaches. Government officials anticipate that the new system will enhance oversight and control. By programming token-based payments with predefined conditions, such as spending limits and industry-specific acceptance criteria, the need for manual audits can be reduced, particularly for transactions that occur outside regular hours. Furthermore, the elimination of intermediaries like card networks is expected to lower transaction fees for small businesses receiving government payments, according to the ministry. This initiative represents the second instance of deposit tokens being used 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, as stated in the report. If the program demonstrates improved control over spending and yields measurable cost savings, the ministry plans to expand it.