South Korea to Introduce Blockchain-Based Tokens for Government Expenditure in Q4

The South Korean Ministry of Economy and Finance is set to launch a pilot program in the fourth quarter to test the use of blockchain-based deposit tokens for government expenditure as part of a broader effort to modernize public fund management. According to local media reports, the pilot program has been approved under the 2026 regulatory sandbox initiative, enabling the use of digital currency for Treasury fund expenditures. This move will replace the traditional government purchasing card system for business promotion expenses with tokenized deposits. By operating outside the constraints of the Treasury Funds Management Act, which previously mandated card-based payments, government agencies will be able to test new methods in a controlled environment. The implementation of token-based payments is expected to enhance oversight, as these payments can be programmed with specific conditions such as spending limits and industry restrictions, potentially reducing the need for manual audits. Additionally, the removal of intermediaries like card networks is anticipated to lower transaction fees for small businesses receiving government payments. Following a successful pilot for electric vehicle-charging infrastructure subsidies, this marks the second instance of deposit tokens being utilized in Treasury operations. The trial is scheduled to take place in Sejong City, with plans for expansion if the program demonstrates improved spending control and significant cost savings.