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 larger effort to modernize public fund management. According to local media reports, the ministry has obtained approval for the pilot under the 2026 regulatory sandbox program, which will enable the use of digital currency for Treasury fund expenditures. This innovation will replace the traditional government purchasing card system for business promotion expenses, allowing agencies to operate outside the existing Treasury Funds Management Act on a limited basis. The new system is expected to enhance oversight, as token-based payments can be programmed with specific conditions, such as spending limits and eligible industries. This could lead to a reduction in manual audits, particularly for spending that occurs outside regular hours. Furthermore, the removal of intermediaries like card networks may result in lower transaction fees for small businesses receiving government payments. Following a previous pilot for electric vehicle-charging infrastructure subsidies, this marks the second instance of deposit tokens being used in Treasury operations. 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 spending control and significant cost savings, the ministry plans to expand it further.