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 public fund management. According to local reports, the ministry has received approval for the pilot under the 2026 regulatory sandbox initiative, which enables the use of digital currency for Treasury fund disbursements. The approved pilot will replace traditional government purchasing cards with tokenized deposits for business promotion expenses. This shift deviates from the long-standing Treasury Funds Management Act, which previously mandated card-based transactions. Within the sandbox environment, agencies will be permitted to operate outside these constraints on a limited basis to test novel approaches. Authorities anticipate that this change will enhance oversight, as token-based payments can be pre-programmed with specific conditions, such as spending limits and industry restrictions. This could decrease the necessity for manual audits, particularly in instances where spending occurs outside regular hours. Furthermore, the system eliminates intermediaries like card networks, which, according to the ministry, may lead to lower transaction fees for small businesses receiving government payments. This marks the second instance of deposit tokens being utilized 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 after a selection process for participating firms, as stated in the report. The ministry intends to expand the program if it demonstrates improved control over expenditure and measurable cost savings.