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

The South Korean Ministry of Economy and Finance is set to launch a pilot program in the fourth quarter to test the use of 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 obtained approval for the pilot under a 2026 regulatory sandbox program, which will involve using digital currency to disburse Treasury funds. The approved pilot will replace government purchasing cards with tokenized deposits for business promotion expenses, thereby altering a long-standing system governed by the Treasury Funds Management Act. By operating in a sandbox environment, agencies will be able to test new methods outside of existing regulations on a limited basis. Officials anticipate that this change will enhance oversight, as token-based payments can be programmed with predefined conditions such as spending limits and industry-specific acceptance. This is expected to reduce the need for manual audits, particularly for spending that occurs outside standard hours. Furthermore, the removal of intermediaries such as card networks is likely to 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, with plans to expand the program if it demonstrates improved control over spending and measurable cost savings.