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 to utilize blockchain-based tokens for government expenditure, as part of a larger effort to modernize 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 for Treasury fund disbursements. This approval will allow for the use of tokenized deposits to cover business promotion expenses, which are currently processed using government-issued purchasing cards. By operating within a sandbox environment, government agencies will be able to temporarily bypass existing regulations governed by the Treasury Funds Management Act, which traditionally required card-based transactions. Officials anticipate that this shift will enhance oversight, as token-based payments can be programmed with predefined parameters, including spending limits and industry-specific restrictions. This could significantly reduce the need for manual audits, particularly in cases where spending occurs outside regular hours. Furthermore, the new system will eliminate intermediaries such as card networks, potentially lowering transaction fees for small businesses that receive government payments, according to the ministry. This initiative marks the second instance of deposit tokens being utilized 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. The ministry plans to expand the program if it demonstrates improved control over expenditure and significant cost savings.