South Korea’s Ministry of Economy and Finance plans to begin testing blockchain-based deposit tokens for government spending in the fourth quarter as part of a broader effort to modernize the way public funds are managed.
The ministry said a pilot using Treasury funds as a digital currency has been approved under the 2026 Regulatory Sandbox Program, local media reported.
This approval will allow business promotion fees, which are currently processed through government purchasing cards, to be paid using tokenized deposits.
The changes change a long-standing system governed by the Treasury Department’s Funds Control Act that required card-based payments. A sandbox environment allows government agencies to operate outside of these rules on a limited basis to test new techniques.
Officials hope the changes will improve oversight. Token-based payments can be programmed with predefined conditions, such as when funds can be used and acceptable industry limits. This can reduce the need for manual audits, especially when expenditures occur outside of standard hours.
The system also cuts out intermediaries such as card networks, which could lower transaction fees for small and medium-sized enterprises receiving payments from the government, the ministry said.
This is the second use of deposit tokens in Treasury operations, following a previous pilot related to electric vehicle charging infrastructure subsidies.
According to the report, the experiment will be conducted in Sejong City after a process to select participating companies. The department plans to expand the program once it shows stronger control over spending and measurable cost savings.
