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

In the fourth quarter, the South Korean Ministry of Economy and Finance is set to launch a trial of blockchain-based deposit tokens for government expenditure as part of a larger effort to modernize public fund management. According to local media, the ministry has obtained approval for a pilot program to utilize digital currency for Treasury fund expenditure under the 2026 regulatory sandbox initiative. This approval enables the use of tokenized deposits for business promotion expenses, which are currently processed using government purchasing cards. The move marks a shift away from the traditional system governed by the Treasury Funds Management Act, which previously required card-based transactions. Within the sandbox environment, agencies will be permitted to operate outside these rules on a limited basis to test novel approaches. Authorities anticipate that this change will enhance oversight, as token-based payments can be programmed with predefined conditions such as spending limits and industry-specific usage. This could lead to a reduction in manual audits, particularly when expenditure occurs outside standard hours. By removing intermediaries like card networks, the system may also lower transaction fees for small businesses receiving government payments, according to the ministry. This initiative represents the second application of deposit tokens 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 plans to expand the program if it demonstrates improved control over expenditure and tangible cost savings.