South Korea to Introduce Blockchain-Based Tokens for Government 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 deposit tokens for government expenditure as part of a broader initiative to modernize public fund management. According to local media reports, the ministry has received approval for the pilot under the 2026 regulatory sandbox program, which will enable the use of digital currency for Treasury fund expenditure. The approved pilot will allow business promotion expenses, currently processed using government purchasing cards, to be paid using tokenized deposits, thus altering the long-standing system governed by the Treasury Funds Management Act. In the sandbox environment, government agencies will be permitted to operate outside the existing rules on a limited basis to test new methods. Authorities anticipate that the new system will enhance oversight, as token-based payments can be programmed with predefined conditions such as spending limits and industry restrictions. This is expected to reduce the need for manual audits, particularly when spending occurs outside regular hours. The system also eliminates intermediaries such as card networks, which, according to the ministry, could result in lower transaction fees for small businesses receiving government payments. This marks the second instance of deposit tokens being used 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 spending and measurable cost savings.