South Korea to Pilot 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 initiative to modernize the management of public funds. According to local media reports, the pilot project, which involves using digital currency to disburse Treasury funds, has been approved under the 2026 regulatory sandbox program. This approval enables the use of tokenized deposits to pay for business promotion expenses, which are currently processed using government purchasing cards. By operating within a sandbox environment, agencies will be able to test new methods outside the constraints of the existing Treasury Funds Management Act, which previously mandated card-based payments. Officials anticipate that this shift will enhance oversight, as token-based 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 transactions that occur outside standard hours. Furthermore, the removal of intermediaries, including card networks, is expected to lower transaction fees for small businesses that receive government payments. This marks the second instance of deposit tokens being utilized in Treasury operations, following an earlier pilot project 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, and the ministry plans to expand the program if it demonstrates improved control over expenditure and measurable cost savings.