A government pilot will replace traditional treasury spending cards with tokenized deposits to fund business promotions, shifting away from the Treasury Funds Management Act’s card-based system.

The program tests programmable money by moving spending from card processing to tokenized deposits, aiming for tighter governance and control over fund execution.

The initial rollout centers on Sejong City, with operator selection underway and a broader rollout slated for the fourth quarter of the year.

Authorities will select operators and collaborate with agencies and businesses to define the experiment, with full implementation planned in Sejong City by Q4.

In the sandbox, agencies can trial methods outside existing rules on a limited basis, with predefined conditions like spending limits and eligible industries to improve oversight.

The initiative seeks to lower intermediary costs for payments to small businesses and reduce reporting burdens through automated oversight.

If results look favorable, expansion to other government functions is possible, aligning with Korea’s broader digital asset regulation efforts, including the Digital Asset Basic Act.

The Ministry of Economy and Finance views the trial as a pathway to explore new payment and settlement methods with potential wider fiscal implications if viable.

Deposits will have preset usage times and allowed spending categories to boost transparency and cut intermediary fees for small firms.

The project fits into broader efforts to digitize government finances and use blockchain to make public spending more efficient and transparent.

South Korea’s ministry will pilot blockchain-based deposit tokens for official duties in late 2026 as part of a regulatory sandbox to modernize public funds management.

The same pilot aims to reduce administrative delays while handling government expenses related to official duties.