South Korea to Pilot Blockchain-Based Deposit Tokens for Public Spending

South Korea is advancing its digital finance infrastructure with a new pilot program to integrate blockchain-based deposit tokens into government spending. The Ministry of Economy and Finance announced that the trial, scheduled for the fourth quarter, will focus on the disbursement of business promotion expenses. Approved under a 2026 regulatory sandbox, the program allows government agencies to bypass the Treasury Funds Management Act, which previously mandated the use of traditional purchasing cards. This shift represents a strategic move toward the modernization of public fund management and fiscal transparency. The tokenized system introduces programmable spending capabilities, allowing the government to set strict conditions on when and where funds are utilized. By automating these constraints, the ministry expects to significantly reduce the burden of manual audits, particularly for spending that occurs outside of standard business hours. Beyond administrative efficiency, the move aims to benefit the private sector by removing card network intermediaries. This reduction in middle-layer fees is expected to lower transaction costs for small businesses that receive government payments. The trial will be centered in Sejong City following a selection process for participating firms. This follows a previous pilot involving electric vehicle charging subsidies, and the government intends to scale the program if it delivers measurable cost savings and tighter spending controls.