- South Korea will test blockchain-based deposit tokens for government spending in Q4 2026.
- Pilot approved under the 2026 regulatory sandbox program.
- Tokenized payments will replace government purchasing cards for certain expenses.
- System enables programmable spending controls and reduces need for manual audits.
- Pilot to take place in Sejong City with potential expansion based on results.
Blockchain Deposit Tokens Approved for Government Spending Pilot: South Korea’s Ministry of Economy and Finance (MOEF) will begin testing blockchain-based deposit tokens for government spending in the fourth quarter of 2026. The initiative is part of a broader effort to modernize public fund management.
The pilot was approved under the 2026 regulatory sandbox program, allowing temporary flexibility from existing financial regulations. Under this framework, selected government operations will use tokenized deposits to process expenses. The approved use case includes business promotion expenses, which are currently handled through government purchasing cards. The new system enables these payments to be executed using blockchain-based tokens.
Shift from Card-Based System Under Sandbox Framework
The pilot introduces changes to the existing framework governed by the Treasury Funds Management Act, which requires card-based payment systems. Within the sandbox environment, participating agencies will operate outside these rules on a limited basis to test alternative payment methods.
The ministry stated that token-based payments can include predefined conditions, such as restrictions on timing and eligible industries. This structure is designed to enhance control over how public funds are used. The system also removes intermediaries such as card networks. According to the ministry, this could lower transaction fees for small businesses receiving government payments.
Second Treasury Pilot and Planned Expansion: This initiative marks the second application of deposit tokens in Treasury operations. A previous pilot was conducted in connection with subsidies for electric vehicle charging infrastructure. The upcoming trial will be carried out in Sejong City following a selection process for participating firms. Authorities plan to expand the program if it demonstrates improved spending control and measurable cost savings.
