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, leveraging blockchain technology to introduce digital tokens for government expenditure as part of a larger effort to modernize public fund management. According to local reports, the ministry has secured approval for the trial under the 2026 regulatory sandbox program, allowing for the utilization of digital currency to disburse Treasury funds. This initiative enables the use of tokenized deposits to settle business promotion expenses, which were previously handled through government-issued purchasing cards. By operating within a sandbox environment, government agencies can temporarily bypass existing regulations governed by the Treasury Funds Management Act, which traditionally mandated card-based transactions. Officials anticipate that this shift will enhance oversight, as token-based payments can be pre-programmed with specific conditions such as time limits and industry restrictions. This could lead to a reduction in manual audits, particularly for transactions occurring outside standard working hours. Furthermore, the removal of intermediaries like card networks is expected to lower transaction fees for small businesses receiving government payments, according to the ministry. This marks the second instance of deposit tokens being used in Treasury operations, following a previous 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, with plans for potential expansion if the program demonstrates improved spending control and significant cost savings.