South Korea’s Ministry of Finance and Economy has selected a “blockchain-based digital currency utilisation trial project” for its 2026 regulatory sandbox plan, opening the door to test blockchain-based execution of public funds. The project will examine the use of deposit tokens for business promotion expenses, one of the clearest attempts so far to apply digital currency infrastructure to treasury operations beyond earlier pilots such as electric vehicle charging facility funding.
Business promotion expenses become the first use case
Under current rules, these expenses are handled through government purchase cards, including credit and debit cards. If payments are made during restricted periods such as late nights or weekends, additional explanations must be submitted afterward for administrative review. The National Treasury Management Act also requires such operational spending to go through government purchase cards, leaving little room for other payment methods. Sandbox approval creates an exception that allows deposit tokens to be used within the pilot.
Programmable rules and fewer intermediaries in settlement
The ministry said the project is expected to improve transparency by pre-setting conditions such as permitted spending times and eligible industry categories when deposit tokens are used. It also aims to lower the fee burden on small business owners through a settlement structure designed to remove intermediaries from the payment flow. The point is simple: the pilot is testing not just a new payment rail, but a model where spending rules are embedded into execution itself.
The finance ministry will oversee the full process
Officials described this as the first regulatory sandbox project in which the ministry directly manages the entire chain, from system review and project selection to operational execution. In its view, that structure should allow a more formal validation of a digital-currency-based treasury execution model. The next steps include selecting participating operators, coordinating with relevant institutions, defining the demonstration scope, and launching the pilot in the fourth quarter of 2026.
Sejong City will host the first rollout
The initial implementation is planned for Sejong City. Expansion will depend on operational results. The ministry also said later phases could extend the model to broader financial projects, alongside possible updates to related legal and institutional frameworks.
Crypto oversight is tightening at the same time
The pilot comes as South Korea broadens regulation across digital assets. Oversight is moving beyond blockchain trial programs into stablecoins, tokenized real-world assets, trading infrastructure, and consumer protection. Authorities are advancing measures to place stablecoins and tokenized assets under tighter financial supervision, including stronger backing requirements and clearer treatment under existing monetary and foreign exchange rules.
Regulators are also examining the rise of API-driven and automated trading, which now accounts for a large share of crypto market activity. In response to fraud-related losses, withdrawal controls and transaction safeguards are also under review.