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

In a bid to modernize public fund management, South Korea's Ministry of Economy and Finance is set to launch a trial of blockchain-based deposit tokens for government expenditure in the fourth quarter. According to local media reports, the ministry has secured approval for the pilot under the 2026 regulatory sandbox program, allowing it to utilize digital currency for Treasury fund spending. The pilot program will enable the use of tokenized deposits for business promotion expenses, which are currently processed using government purchasing cards. By operating within the sandbox environment, agencies will be able to temporarily bypass the existing rules governed by the Treasury Funds Management Act, which traditionally required card-based payments. The introduction of token-based payments is expected to enhance oversight, as these payments can be programmed with predefined conditions such as usage limits and acceptable industries. This, in turn, could reduce the need for manual audits, particularly in cases where spending occurs outside standard hours. The removal of intermediaries like card networks is also anticipated to lower transaction fees for small businesses receiving government payments. This initiative marks the second instance of deposit tokens being utilized in Treasury operations, following a previous pilot related to subsidies for electric vehicle-charging infrastructure. The trial is scheduled to take place in Sejong City, following a selection process for participating firms, with plans for potential expansion if the program demonstrates improved control over spending and significant cost savings.