South Korea’s Ministry of Economy and Finance will begin testing blockchain-based deposit tokens for public spending in the fourth quarter as part of a broader push to modernize the way public funds are managed.
The ministry said the pilot to spend Treasury funds as a digital currency was approved under a sandbox regulatory program by 2026, local media reported.
The approval allows business promotion expenses, currently processed with government purchasing cards, to be paid through tokenized deposits.
The change alters 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 those rules on a limited basis to test new methods.
Officials hope the change will improve oversight. Token-based payments can be scheduled with predefined conditions, including limits on when the funds can be used and which industries can accept them. This could reduce the need for manual audits, especially when spending occurs outside of standard hours.
The system also eliminates middlemen such as card networks, which the ministry said could reduce transaction fees for small businesses receiving payments from the government.
This marks the second use of deposit tokens in Treasury operations, following an earlier pilot linked to subsidies for electric vehicle charging infrastructure.
The trial will be carried out in Sejong City after a selection process of participating companies, the report states. The ministry plans to expand the program if it demonstrates greater control over spending and measurable cost savings.
