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

As part of a larger effort to modernize public fund management, 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. According to local media reports, the ministry has received approval for a pilot program under the 2026 regulatory sandbox initiative, which will enable the use of digital currency for Treasury fund expenditures. The approved pilot will allow for the use of tokenized deposits to cover business promotion expenses, which are currently processed using government purchasing cards. This change marks a significant departure from the traditional system governed by the Treasury Funds Management Act, which has long relied on card-based payments. In the sandbox environment, government agencies will be able to test new methods outside of the existing rules on a limited basis. Government officials anticipate that this shift will enhance oversight, as token-based payments can be programmed with predefined conditions such as spending limits and industry-specific usage. This could lead to a reduction in manual audits, particularly for expenditures that occur outside regular hours. Additionally, the new system eliminates intermediaries like card networks, which could result in lower transaction fees for small businesses receiving government payments, according to the ministry. This is the second instance of deposit tokens being used in Treasury operations, following an earlier pilot program related to subsidies for electric vehicle charging infrastructure. The trial is scheduled to take place in Sejong City after 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.