South Korea to Pilot Blockchain-Based Deposit Tokens for Government Spending in Q4 2026

South Korea's Ministry of Economy and Finance will launch a blockchain deposit token pilot program in Q4 2026 to test digital currency payments for government business promotion expenses in Sejong City. The initiative, approved under a 2026 regulatory sandbox program, alters the Treasury Funds Management Act's long-standing requirement for card-based payments. The tokens feature programmable controls including spending limits, timing restrictions, and category limitations designed to reduce manual audits and transaction fees by removing card network intermediaries. This marks South Korea's second deposit token trial in Treasury operations, following a previous pilot tied to electric vehicle charging infrastructure subsidies. The Ministry plans to expand the program if it demonstrates stronger spending control and measurable cost savings, with small businesses potentially benefiting from lower transaction fees.

South Korea's blockchain-based deposit token pilot program

• ▪South Korea's blockchain deposit token pilot will allow business promotion expenses, currently processed with government purchasing cards, to be paid using tokenized deposits
• ▪South Korea's blockchain deposit token trial will take place in Sejong City after a selection process for participating firms
• ▪South Korea's Ministry of Economy and Finance will begin testing blockchain-based deposit tokens for government spending in the fourth quarter of 2026
• ▪South Korea's blockchain deposit token pilot alters a long-standing system governed by the Treasury Funds Management Act, which required card-based payments
• ▪South Korea's Ministry of Economy and Finance plans to expand the blockchain deposit token program if it shows stronger control over spending and measurable cost savings
• ▪South Korea's pilot program to spend Treasury funds as digital currency was approved under a 2026 regulatory sandbox program

Technical features and operational benefits of tokenized payments

• ▪Token-based payments can be programmed with predefined conditions, including limits on when funds can be used and which industries can accept them
• ▪Token-based payments can be programmed with spending limits and restrictions on which industries can use them
• ▪Blockchain-based deposit token systems remove intermediaries such as card networks from government payment processing
• ▪Removing card network intermediaries from tokenized payment systems could lower transaction fees for small businesses that receive government payments
• ▪Tokenized payment systems could reduce the need for manual audits, especially when spending occurs outside standard hours

Broader context of deposit tokens in government operations

• ▪South Korea's regulatory sandbox environment allows agencies to operate outside Treasury Funds Management Act rules on a limited basis to test new methods
• ▪South Korea's fourth quarter 2026 blockchain deposit token pilot marks the second use of deposit tokens in Treasury operations
• ▪South Korea previously piloted deposit tokens tied to electric vehicle-charging infrastructure subsidies

Perspective of South Korea's Ministry of Economy and Finance

• ▪South Korea's Ministry of Economy and Finance expects blockchain deposit tokens to demonstrate cost savings compared to traditional card-based payment systems
• ▪South Korea's Ministry of Economy and Finance sees programmable spending controls as a way to strengthen oversight of government expenditures

Perspective of Card network companies

• ▪Card network companies currently process government business promotion expenses through the purchasing card system in South Korea
• ▪Card network companies could lose government payment processing revenue if South Korea expands blockchain deposit tokens beyond the pilot program