The South Korean Ministry of Economy and Finance is set to launch a pilot program in the fourth quarter to test the use of blockchain-based tokens for government spending, as part of a broader effort to overhaul the management of public funds. According to local media reports, the ministry has received approval for the pilot program under the 2026 regulatory sandbox initiative, which will enable the use of digital currency to disburse Treasury funds. The approval permits the use of tokenized deposits to cover business promotion expenses, which are currently processed using government-issued purchasing cards. This move marks a significant shift from the traditional system governed by the Treasury Funds Management Act, which mandated the use of card-based payments.
Within the sandbox environment, government agencies will be allowed to operate outside these rules on a limited basis to test innovative methods. Government officials anticipate that this change will enhance oversight and transparency. Since token-based payments can be programmed with predefined conditions, such as spending limits and industry-specific restrictions, the need for manual audits is likely to decrease, particularly for transactions that occur outside regular working hours.
Furthermore, the new system eliminates intermediaries like card networks, which could lead to lower transaction fees for small businesses receiving government payments, according to the ministry. This initiative represents the second instance of using deposit tokens in Treasury operations, following a previous pilot program 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.
If the program demonstrates improved control over spending and yields measurable cost savings, the ministry plans to expand it.