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

As part of a broader effort to modernize public fund management, South Korea's Ministry of Economy and Finance is set to launch a pilot project in the fourth quarter, testing the use of blockchain-based deposit tokens for government spending. According to local media reports, the project has been approved under the 2026 regulatory sandbox program, allowing for the use of tokenized deposits to cover business promotion expenses, which are currently processed using government purchasing cards. This move marks a significant departure from the traditional system governed by the Treasury Funds Management Act, which previously required card-based payments. The new approach enables agencies to operate outside these rules on a limited basis, testing innovative methods in a sandbox environment. Officials anticipate that this change will enhance oversight, as token-based payments can be programmed with specific conditions, including spending limits and industry restrictions. This could lead to a reduction in manual audits, particularly for spending that occurs outside standard hours. Furthermore, the system eliminates intermediaries such as card networks, which, according to the ministry, could result in lower transaction fees for small businesses receiving government payments. This is the second instance of deposit tokens being used in Treasury operations, following an earlier pilot project 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. If the program demonstrates improved control over spending and yields measurable cost savings, the ministry plans to expand it.