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 trial of blockchain-based deposit tokens for government expenditure in the fourth quarter, as part of a broader initiative to enhance the management of public funds. According to local media reports, the ministry has received approval for the pilot project under the 2026 regulatory sandbox program, which will involve the use of digital currency for Treasury fund expenditures. The approved pilot will enable the use of tokenized deposits for business promotion expenses, which are currently processed using government purchasing cards. This move marks a significant departure from the traditional system governed by the Treasury Funds Management Act, which mandated the use of card-based payments. In the sandbox environment, government agencies will be allowed to operate outside these rules on a limited basis to test innovative methods. Government officials anticipate that this change will lead to improved oversight, as token-based payments can be programmed with predefined conditions, including spending limits and restrictions on which industries can accept them. This could reduce the need for manual audits, particularly when spending occurs outside regular hours. The new system also eliminates intermediaries, such as card networks, which could result in lower transaction fees for small businesses receiving government payments, according to the ministry. This is the second instance of deposit tokens being used in Treasury operations, following an earlier pilot project related to subsidies for electric vehicle-charging infrastructure. The trial is scheduled to take place in Sejong City, following a selection process for participating firms, as stated in the report. The ministry plans to expand the program if it demonstrates stronger control over expenditure and measurable cost savings.