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

As part of a broader effort to revamp the management of public funds, 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 the pilot program under the 2026 regulatory sandbox initiative, which will enable the use of digital currency to disburse Treasury funds. The approved pilot will allow businesses to utilize tokenized deposits to cover promotional expenses, which are currently processed using government-issued purchasing cards. This shift marks a significant departure from the traditional system governed by the Treasury Funds Management Act, which mandated the use of card-based payments. Within the sandbox environment, government agencies will be permitted to operate outside these constraints on a limited basis to test innovative approaches. Government officials anticipate that this change will enhance oversight and transparency. Since token-based payments can be programmed with predefined parameters, including restrictions on usage and eligible industries, the need for manual audits is likely to decrease, particularly in instances where spending occurs outside regular working hours. Furthermore, the removal of intermediaries such as card networks is expected to lower transaction fees for small businesses that receive government payments, according to the ministry. This initiative represents the second instance of deposit tokens being utilized 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, following a selection process for participating firms, as stated in the report. The ministry plans to expand the program if it yields stronger spending controls and measurable cost savings.