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, leveraging blockchain technology to issue deposit tokens for government expenditure 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 initiative, allowing for the use of digital currency to disburse Treasury funds. The approved pilot enables the utilization of tokenized deposits for business promotion expenses, which are currently processed via government purchasing cards. This development marks a significant shift from the traditional system governed by the Treasury Funds Management Act, which mandated card-based payments. Within the sandbox environment, agencies will be permitted to operate outside these rules 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 criteria. This could minimize the need for manual audits, particularly when spending occurs outside regular hours. The new system also eliminates intermediaries like card networks, which, according to the ministry, could lead to reduced transaction fees for small businesses receiving government payments. This initiative represents the second instance of deposit token utilization 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 following a selection process for participating firms, as stated in the report. The ministry plans to expand the program if it demonstrates enhanced control over expenditure and measurable cost savings.