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

The South Korean Ministry of Economy and Finance is set to launch a pilot program in the fourth quarter to utilize blockchain-based tokens for government expenditure as part of a larger initiative to modernize public fund management. According to local media, the ministry has received approval for the pilot under the 2026 regulatory sandbox program, enabling the use of digital currency for Treasury fund spending. The approved pilot will allow businesses to utilize tokenized deposits for promotional expenses, which are currently processed using government-issued purchasing cards. This development marks a shift from the traditional system governed by the Treasury Funds Management Act, which previously mandated card-based payments. In the sandbox environment, government agencies will be permitted to operate outside these regulations on a limited basis to test innovative methods. Officials anticipate that this change will enhance oversight, as token-based payments can be programmed with predefined conditions such as spending limits and industry-specific acceptance. This could lead to a reduction in manual audits, particularly for spending that occurs outside standard hours. The new system also eliminates intermediaries like card networks, which, according to the ministry, could result in lower transaction fees for small businesses receiving government payments. This initiative 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, as stated in the report. The ministry plans to expand the program if it demonstrates improved control over expenditure and measurable cost savings.