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South Korea Moves to Replace Government Cards With Blockchain Deposit Tokens

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TLDR:

  • South Korea’s Ministry of Finance will pilot blockchain deposit tokens for government expenses in Q4 2026.
  • Deposit tokens allow preset spending rules, removing the need for after-the-fact transaction reviews by officials.
  • Direct payments via deposit tokens eliminate third-party processors, cutting transaction fees for small businesses.
  • Sejong City serves as the launch point, with a step-by-step national expansion planned based on pilot results.

South Korea’s Ministry of Finance and Economy is set to replace government purchase cards with deposit tokens. These blockchain-based digital currency tools will be tested through a pilot launching in the fourth quarter of 2026.

Sejong City will serve as the starting point for the initiative. Deposit tokens carry built-in spending rules and represent actual currency on a blockchain. This is the second government use of digital currency for treasury fund execution in South Korea.

How Deposit Tokens Will Change Government Spending Controls

The existing framework reviews spending only after transactions have already occurred. Officials must then justify any payments made outside approved guidelines.

Deposit tokens change this by setting conditions in advance of any transaction. This prevents improper use and ensures automatic tracking across all payments.

Business promotion expenses are the first category the ministry targets with this change. Under current law, these expenses must be executed through government purchase cards.

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A regulatory sandbox exemption now allows deposit tokens to replace this card-based method. No changes to existing legislation are required for the pilot to proceed.

The Ministry of Finance and Economy stated, “This project is the first case of a planned regulatory sandbox directly promoted by the Ministry of Finance and Economy from the review of the system.”

Officials added that it “is meaningful in that it can systematically verify the digital currency-based fiscal execution model.”

These remarks reflect the government’s confidence in the program’s broader potential. The ministry views this not just as a test but as a foundation for future fiscal reform.

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Removing intermediaries is another feature the ministry expects to benefit small businesses. Direct payments through deposit tokens bypass third-party processors entirely.

This is expected to lower transaction fees for vendors receiving government payments. The cost savings could be meaningful for smaller businesses operating within the public procurement space.

Sejong City Pilot to Guide Expansion of the Blockchain Program

The pilot project will begin in Sejong City in the fourth quarter of 2026. The ministry will finalize the scope of the demonstration and select participating businesses beforehand.

Results from the Sejong City phase will determine how the program expands further. A step-by-step rollout is planned based on what the pilot data shows.

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The ministry noted that “the transparency of execution will increase by being able to preset and manage the time and industry that can be executed.”

Currently, business promotion expenses used during late nights or weekends require after-the-fact explanations. With deposit tokens, those restrictions are programmed directly into the payment system. This removes the need for manual reviews of time-sensitive transactions.

Deposit tokens differ from standard crypto assets in key ways. They are stable in value and carry programmed rules that restrict how they are spent.

These features make them more suitable for controlled public finance applications. The South Korean government sees them as a practical tool for modernizing how it manages public funds.

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The regulatory sandbox framework remains central to the legal structure of this pilot. Since current regulations require purchase cards, the sandbox grants a temporary exemption for testing purposes.

The ministry will use findings from the pilot to assess whether permanent regulatory reform is needed. A positive outcome could support a broader shift toward blockchain-based government payments across South Korea.

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South Korea to trial tokenized bank deposits for government operational spending

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South Korea to trial tokenized bank deposits for government operational spending

South Korea is moving toward a more transparent public ledger by testing tokenized deposits for day-to-day government spending in a new regulatory sandbox trial.

Summary

  • South Korea will launch a blockchain-based pilot in Sejong City to handle daily government operational spending through tokenized deposits.
  • The Ministry of Economy and Finance plans to replace traditional government credit cards with programmable digital payments that feature predefined limits on timing and usage categories.
  • The initiative targets a full rollout by the final quarter of 2026 and forms part of a strategy to digitize one-quarter of all treasury fund executions by 2030.

According to the Ministry of Economy and Finance (MOEF), the government has selected a pilot project that uses blockchain-based deposits to handle operational expenses, with a full rollout scheduled for the fourth quarter of 2026. 

This initiative will initially launch in Sejong City, replacing the current system where officials use government-issued credit and debit cards for official business. 

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Unlike traditional payments that rely on post-use reporting to catch errors, this digital framework allows authorities to pre-set spending conditions, such as specific time windows and permitted categories, to ensure funds are used exactly as intended.

These tokenized deposits act as digital versions of standard bank deposits held on a distributed ledger. Because they remain liabilities of participating commercial banks and operate within existing financial systems, they offer more stability than private stablecoins.

The MOEF confirmed that nine major banks—including KB Kookmin, Shinhan, Woori, and Hana—are participating in the experiment to issue and manage these tokens. This infrastructure effectively links the government’s Digital Budget and Accounting System (dBrain) with the blockchain, creating a traceable path for every won spent.

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By moving beyond one-off subsidies and into recurring operational costs, the ministry expects to see a significant reduction in the misuse of public funds and a decrease in settlement times.

The sandbox environment provides a legal carve-out for this trial, as current regulations typically mandate that such expenses be processed through specific physical cards. 

Moving to a programmable system allows for a level of oversight that traditional banking cannot match, potentially lowering transaction fees for small businesses receiving government payments by removing traditional card network intermediaries.

“The trial will serve as a basis for evaluating new payment and settlement methods, with potential implications for fiscal operations if the model proves viable,” the ministry stated.

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Integrating distributed ledger technology (DLT) aligns with a long-term strategy to digitize South Korea’s treasury. The MOEF previously disclosed a target to convert 25% of all treasury fund executions to digital currency by 2030. 

Success in Sejong City will likely lead to legislative updates intended to scale this model across all branches of the national government.

The initiative builds on a previous project launched in March involving the Environment Ministry and the Bank of Korea, which utilized tokenized deposits to manage 30 billion won in subsidies for electric vehicle charging stations.

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Houston Man Sentenced to 23 Years Over Fake Gold- and Art-Backed Crypto Scheme

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Houston Man Sentenced to 23 Years Over Fake Gold- and Art-Backed Crypto Scheme

A Texas man received a 23-year federal prison sentence for running a crypto scam. The fraud drained nearly 1,000 investors of more than $20 million through a sham asset-backed token.

Robert Dunlap, 55, of Houston, sold a digital asset called Meta-1 Coin from 2018 to 2023. Federal prosecutors in the Northern District of Illinois led the case.

How the Meta-1 Coin Crypto Scam worked

According to the press release, Dunlap built his pitch around fabricated reserves. He told investors that Meta-1 Coin was backed by up to $1 billion in art. The collection supposedly included works attributed to Pablo Picasso, Salvador Dali, Vincent Van Gogh, and others.

He also claimed roughly $44 billion in gold stood behind the token. An accounting firm had audited and certified the bullion, Dunlap falsely told buyers.

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“Defendant lied to investors for years telling them that he had created a safe investment for them. Over the years, defendant was unrepentant and his lies became bigger. Would-be criminals planning to engage in similar conduct need to know that such actions will be met with a serious repercussion that includes loss of one’s liberty for an extended period of time,” Assistant US Attorneys Jared Hasten and Paige Nutini argued in the government’s sentencing memorandum.

A federal jury convicted Dunlap on two counts of mail fraud in November 2025. US District Judge LaShonda A. Hunt handed down the 23-year sentence this week. She also ordered restitution for fraud victims, many of whom reported losing their life savings.

US Attorney Andrew S. Boutros and special agents from the FBI’s Chicago Field Office and IRS Criminal Investigation (IRS-CI) announced the sentence. They received assistance from the Securities and Exchange Commission (SEC) and the US Attorney’s Office for the Eastern District of Virginia.

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Ketman Project Identifies 100 North Korean IT Workers Working in Web3

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Ketman Project Identifies 100 North Korean IT Workers Working in Web3

The Ketman Project, funded by an Ethereum Foundation stipend, identified 100 North Korean IT workers and alerted about 53 projects employing DPRK operatives.

The Ethereum Foundation said it funded a six-month project that exposed 100 North Korean operatives who had infiltrated Web3 companies under fake identities.

The foundation on Thursday shared a recap of its ETH Rangers program, which was launched in late 2024 to provide “stipends for individuals doing public goods security work” within the ecosystem.

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One of the recipients used the capital to build the Ketman Project to focus on investigating “fake developers” embedded within crypto, particularly operatives from the People’s Republic of Korea.

During the six-month stipend period, the Ketman Project identified “100 different DPRK IT workers operating within Web3 organizations” and reached out to about 53 projects to alert them about having potentially employed active DPRK operatives.

“This work directly addresses one of the most pressing operational security threats facing the Ethereum ecosystem today,” the Ethereum Foundation said.

North Korean operatives have been plaguing the crypto sector, leading to billions worth of crypto stolen over the years. One of the highest-profile hacking groups from North Korea is known as the Lazarus Group.

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Ketman Project website articles on DPRK operatives. Source: Ketman Project

The Ethereum Foundation did not go into detail about how the Ketman Project was able to identify the DPRK operatives. However, the project’s website has an extensive range of articles explaining the types of “tactics, behaviors and operational patterns” the operatives deploy.

Related: CIA to integrate AI ‘co-workers’ to process intelligence, catch spies

They include technical red flags such as reusing avatars and profile metadata across multiple GitHub accounts, exposing unlinked email addresses during accidental screen sharing, and displaying default language settings, such as Russian, that contradict their claimed nationality.

Alongside identifying North Korean operatives, the Ketman Project also developed an open-source detection tool to identify suspicious GitHub activity and co-authored an industry-standard framework for identifying DPRK IT workers in partnership with blockchain-focused nonprofit organization the Security Alliance.

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