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, testing the use of blockchain-based deposit tokens for government expenditure as part of a larger effort to modernize public fund management. According to local reports, the ministry has received approval for the pilot under the 2026 regulatory sandbox program, enabling the use of digital currency for Treasury fund expenditure. The program will replace the traditional government purchasing card system for business promotion expenses with tokenized deposits, marking a significant shift from the long-standing Treasury Funds Management Act. By operating in a sandbox environment, agencies will be able to test new methods outside of the existing regulations. Officials anticipate that the new system will enhance oversight, as token-based payments can be programmed with specific conditions such as spending limits and industry restrictions. This is expected to reduce the need for manual audits, particularly for spending that occurs outside of standard hours. The removal of intermediaries like card networks is also expected to lower transaction fees for small businesses receiving government payments. This is the second instance of deposit tokens being used in Treasury operations, following a previous pilot for electric vehicle-charging infrastructure subsidies. The trial will be conducted in Sejong City, with participating firms selected through a designated process. The ministry plans to expand the program if it demonstrates improved control over spending and significant cost savings.