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

As part of a broader effort to modernize public fund management, South Korea's Ministry of Economy and Finance is set to launch a pilot program in the fourth quarter, testing the use of blockchain-based deposit tokens for government spending. According to local media reports, the ministry has received approval for the pilot under a 2026 regulatory sandbox initiative, which will involve using digital currency to disburse Treasury funds. The approved pilot will enable the use of tokenized deposits to cover business promotion expenses, which are currently processed using government-issued purchasing cards. This development marks a significant shift from the traditional system governed by the Treasury Funds Management Act, which had previously 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 approaches. Government officials anticipate that this change will enhance oversight and control. Since token-based payments can be programmed with predefined parameters, including usage limits and industry-specific acceptance, the need for manual audits is expected to decrease, particularly for transactions occurring outside regular hours. Furthermore, the removal of intermediaries such as card networks is expected to lower transaction fees for small businesses receiving government payments, according to the ministry. This initiative follows an earlier pilot program that utilized deposit tokens for subsidies related to electric vehicle charging infrastructure. The trial is scheduled to take place in Sejong City, following a selection process for participating firms. If the program demonstrates improved control over spending and yields measurable cost savings, the ministry plans to expand it.