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

The South Korean Ministry of Economy and Finance is set to launch a trial of blockchain-based deposit tokens for government spending in the fourth quarter, as part of a larger effort to modernize the management of public funds. According to local media reports, the ministry has received approval for the pilot under the 2026 regulatory sandbox program, which will enable the use of digital currency for Treasury fund expenditures. This initiative will replace the traditional government purchasing card system for business promotion expenses with tokenized deposits. By operating within a sandbox environment, government agencies will be able to test new methods outside of the existing rules governed by the Treasury Funds Management Act. 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 acceptance criteria. This could significantly reduce the need for manual audits, particularly for transactions that occur outside regular hours. Furthermore, the removal of intermediaries like card networks is expected to lower transaction fees for small businesses that receive government payments. This marks 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, after a selection process for participating firms, and the ministry plans to expand the program if it demonstrates improved control over spending and significant cost savings.