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 expenditure 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 allow for the use of digital currency to disburse Treasury funds. This move will enable the use of tokenized deposits to cover business promotion expenses, which are currently processed using government purchasing cards. By operating within a sandbox environment, agencies will be able to test new methods outside of the existing rules governed by the Treasury Funds Management Act, which traditionally requires card-based payments. The introduction of token-based payments is expected to enhance oversight, as these payments can be programmed with predefined conditions such as spending limits and industry-specific acceptance criteria. This could minimize the need for manual audits, particularly for spending that occurs outside standard hours. Furthermore, the removal of intermediaries like card networks is anticipated to reduce transaction fees for small businesses receiving government payments. This initiative 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, with participating firms to be selected through a designated process. The ministry plans to expand the program if it demonstrates improved control over spending and yields measurable cost savings.