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

As part of its efforts to modernize public fund management, South Korea's Ministry of Economy and Finance is set to launch a trial of blockchain-based deposit tokens for government expenditure in the fourth quarter. According to local media reports, the ministry has received approval for the pilot under the 2026 regulatory sandbox program, enabling the use of digital currency to disburse Treasury funds. The initiative 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. In the sandbox environment, government agencies will be allowed to operate outside the existing rules on a limited basis to test innovative methods. The introduction of token-based payments is expected to enhance oversight, as these can be programmed with predefined conditions such as spending limits and industry-specific usage. This could lead to a reduction in manual audits, particularly for spending that occurs outside regular hours. By removing intermediaries like card networks from the equation, the ministry anticipates 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 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, with plans for expansion if the program demonstrates improved control over spending and significant cost savings.