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 tokens for government spending as part of a broader effort to modernize public fund management. According to local media reports, the ministry has secured approval for the pilot under a 2026 regulatory sandbox initiative, which will involve using digital currency to disburse Treasury funds. The approved pilot will enable the use of tokenized deposits to cover business promotion expenses, which are currently processed using government purchasing cards. By operating within a sandbox environment, agencies will be able to temporarily bypass existing rules governed by the Treasury Funds Management Act, which mandates 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 spending limits and industry-specific usage. This could lead to a reduction in manual audits, particularly for spending that occurs outside standard hours. Furthermore, the removal of intermediaries such as card networks is 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 an earlier pilot related to subsidies for electric vehicle-charging infrastructure. The trial is scheduled to take place in Sejong City, with participating firms to be selected through a competitive process. If the program yields positive results in terms of enhanced spending control and cost savings, the ministry plans to expand it further.