South Korea to Pilot Blockchain-Based Government Spending Tokens in Q4

As part of a broader initiative 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 expenditures. According to local media reports, the pilot program, which involves spending Treasury funds in the form of digital currency, has been approved under the 2026 regulatory sandbox program. This approval enables the use of tokenized deposits for business promotion expenses, currently processed using government purchasing cards. By altering the long-standing system governed by the Treasury Funds Management Act, which previously required card-based payments, agencies will be able to operate outside these rules on a limited basis to test new methods within the sandbox environment. 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 usage. This could lead to a reduction in manual audits, particularly when spending occurs outside standard hours. Furthermore, the system eliminates intermediaries like card networks, which, according to the ministry, could result in lower transaction fees for small businesses receiving government payments. This pilot program marks the second instance of deposit tokens being utilized 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 stronger control over spending and measurable cost savings.