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

As part of a larger effort to modernize public fund management, South Korea's Ministry of Economy and Finance is set to launch a pilot program in the fourth quarter, testing the use of blockchain-based deposit tokens for government expenditure. The ministry has obtained approval for the pilot under the 2026 regulatory sandbox program, as reported by local media. This initiative will enable the use of tokenized deposits to cover business promotion expenses, which are currently processed using government purchasing cards. By doing so, the government is altering a long-standing system governed by the Treasury Funds Management Act, which previously required card-based payments. Within the sandbox environment, agencies will be allowed to operate outside these rules on a limited basis to test new methods. Officials anticipate that this change will enhance oversight, as token-based payments can be programmed with predefined conditions, including restrictions on when funds can be used and which industries can accept them. This could lead to a reduction in manual audits, particularly when spending occurs outside standard hours. Furthermore, the system eliminates intermediaries such as card networks, which the ministry believes could result in lower transaction fees for small businesses receiving government payments. This marks the second instance of deposit tokens being used 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 after a selection process for participating firms, according to the report. The ministry plans to expand the program if it demonstrates improved control over spending and measurable cost savings.