South Korea’s Ministry of Economy and Finance will begin testing blockchain-based deposit tokens for government spending in the fourth quarter, as part of a broader initiative to modernize how public funds are managed.
The ministry said the pilot project to spend Treasury funds in the form of digital currency had been approved under a regulatory sandbox program by 2026, local media reported.
The approval allows trade promotion expenses, currently processed with government acquisition cards, to be paid using token deposits.
This change modifies a long-standing system governed by the Treasury Funds Management Act, which required card payments. In the sandbox environment, agencies will be able to operate outside of these rules on a limited basis to test new methods.
Officials expect the change to improve oversight. Token-based payments can be programmed with predefined conditions, including limits on when funds can be used and which sectors can accept them. This could reduce the need for manual audits, particularly when spending occurs outside of normal hours.
The system also cuts out middlemen such as card networks, which the ministry said could reduce transaction fees for small businesses that receive government payments.
This is the second use of deposit tokens in Treasury operations, following a previous pilot related to subsidies for electric vehicle charging infrastructure.
The trial will take place in Sejong City after a selection process for participating companies, the report said. The department plans to expand the program if it demonstrates better spending control and measurable savings.
