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 expenditure as part of a broader initiative to modernize public fund management. According to local media reports, the ministry has received approval for the pilot under the 2026 regulatory sandbox program, which will enable the use of digital currency for Treasury fund expenditure. The approved pilot will allow for the use of tokenized deposits to cover business promotion expenses, which are currently processed using government-issued purchasing cards. This development marks a significant shift from the traditional system governed by the Treasury Funds Management Act, which had previously mandated the use of card-based payments. The regulatory sandbox environment will permit agencies to operate outside these rules on a limited basis to test innovative methods. Government officials anticipate that this change will enhance oversight and control. The use of token-based payments, which can be programmed with specific conditions such as spending limits and industry restrictions, is expected to reduce the need for manual audits, particularly in cases where spending occurs outside regular hours. By removing intermediaries such as card networks from the payment process, the ministry believes that the new system could lead to lower transaction fees for small businesses that receive government payments. This initiative follows an earlier pilot program that utilized deposit tokens for subsidies related to electric vehicle charging infrastructure. The trial is scheduled to take place in Sejong City, with participating firms to be selected through a formal process. If the program demonstrates improved control over expenditure and measurable cost savings, the ministry plans to expand it further.