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

In a bid to modernize public fund management, South Korea's Ministry of Economy and Finance is set to launch a pilot program in the fourth quarter, leveraging blockchain technology to test digital tokens for government expenditure. According to local media reports, the ministry has secured approval for the pilot under the 2026 regulatory sandbox program, allowing for the use of tokenized deposits to cover business promotion expenses, which are currently processed via government purchasing cards. This development marks a significant shift from the traditional system governed by the Treasury Funds Management Act, which mandated card-based payments. Within the sandbox environment, agencies will be able to operate outside these rules on a limited basis to experiment with novel approaches. Authorities anticipate that this change will enhance oversight, as token-based payments can be programmed with predefined conditions, including time limits and industry-specific acceptance. This could lead to a reduction in manual audits, particularly for spending that occurs outside standard hours. Furthermore, the system eliminates intermediaries such as card networks, which, according to the ministry, could result in lower transaction fees for small businesses receiving government payments. This initiative follows an earlier pilot program that utilized deposit tokens for subsidies related to electric vehicle-charging infrastructure. The trial is slated to take place in Sejong City, following a selection process for participating firms, as reported. The ministry plans to expand the program if it demonstrates enhanced control over spending and yields measurable cost savings.