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 trial of blockchain-based deposit tokens for government expenditure in the fourth quarter, as part of a larger effort to streamline public fund management. According to local reports, the ministry has received approval for the pilot under the 2026 regulatory sandbox program, enabling the use of digital currency for Treasury fund disbursements. The approval permits the use of tokenized deposits for business promotion expenses, which are currently processed using government purchasing cards. This change marks a departure from the traditional system governed by the Treasury Funds Management Act, which mandated card-based payments. In the sandbox environment, agencies will be allowed to operate outside these rules on a limited basis to test innovative approaches. 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 acceptance criteria. This could minimize the need for manual audits, particularly when spending occurs outside regular hours. By removing intermediaries like card networks, the ministry expects to lower transaction fees for small businesses receiving government payments. This initiative follows an earlier pilot project that utilized deposit tokens for electric vehicle-charging infrastructure subsidies, marking the second use of deposit tokens in Treasury operations. The trial is scheduled to take place in Sejong City, following a selection process for participating firms. If the program demonstrates improved control over spending and significant cost savings, the ministry plans to expand it.