South Korea to Introduce Blockchain-Based Tokens for Public 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 tokens for government expenditure as part of a broader effort to modernize public fund management. According to local media reports, the ministry has obtained approval for the pilot under a 2026 regulatory sandbox program, which will enable the use of digital currency to spend Treasury funds. The program will replace the current system of government purchasing cards with tokenized deposits for business promotion expenses. By operating in a sandbox environment, agencies will be able to bypass traditional rules and test new methods on a limited basis. Officials anticipate that this change will enhance oversight, as token-based payments can be pre-programmed with specific conditions such as spending limits and industry restrictions. This could minimize the need for manual audits, particularly for spending that occurs outside regular hours. Additionally, the removal of intermediaries like card networks may lead to lower transaction fees for small businesses receiving government payments. This initiative marks the second instance of deposit tokens being used 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 after a selection process for participating firms, with plans to expand the program if it demonstrates improved control over spending and significant cost savings.