South Korea’s Ministry of Economy and Finance will begin testing a blockchain-based deposit token for government spending in the fourth quarter as part of a broader push to modernize the way public funds are managed.
The ministry said a pilot to use Treasury funds as a digital currency has been approved under the 2026 regulatory sandbox program, local media reported.
The approval allows business promotion expenses currently processed using government procurement cards to be paid using tokenized deposits.
The change alters a long-standing system governed by the Treasury Management Act, which required card-based payments. In a sandbox environment, agencies will be able to operate outside these rules on a limited basis to test new approaches.
Officials expect the change will improve oversight. Token-based payments can be programmed according to predefined conditions, including restrictions on when funds can be used and which industries can accept funds. This can reduce the need for manual auditing, especially when expenditures occur outside of standard hours.
The system also eliminates intermediaries such as card networks, which the ministry said could reduce transaction costs for small businesses receiving government payments.
This marks the second use of the deposit token in Treasury operations, following an earlier pilot related to subsidies for electric vehicle charging infrastructure.
The trial will be conducted in Sejong City after screening of participating companies, the report said. The department plans to expand the program if it shows stronger controls on spending and measurable cost savings.
