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 trial of blockchain-based deposit tokens for government expenditure in the fourth quarter, 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 development marks a shift away from the traditional card-based payment system, which was governed by the Treasury Funds Management Act. By utilizing tokenized deposits, business promotion expenses can now be settled, offering a more flexible and efficient alternative. The new system is expected to enhance oversight, as token-based payments can be pre-programmed with specific conditions, such as spending limits and industry restrictions. This could lead to a reduction in manual audits, particularly for transactions occurring outside regular hours. Furthermore, the removal of intermediaries like card networks may result in lower transaction fees for small businesses receiving government payments. Following a successful pilot for electric vehicle-charging infrastructure subsidies, this initiative represents the second application of deposit tokens in Treasury operations. The trial is scheduled to take place in Sejong City, with participating firms to be selected through a designated process. If the program demonstrates improved spending control and cost savings, the ministry plans to expand it further.