South Korea to Pilot Blockchain-Based Tokens for Government Expenditure in Q4

As part of its effort to modernize public fund management, South Korea's Ministry of Economy and Finance is set to launch a trial of blockchain-based deposit tokens for government spending in the fourth quarter. According to local reports, the ministry has secured approval for the pilot under the 2026 regulatory sandbox program, allowing it to use digital currency for Treasury fund expenditures. This move will enable the use of tokenized deposits for business promotion expenses, which are currently processed through government purchasing cards. By operating within the sandbox environment, agencies can temporarily bypass the constraints of the Treasury Funds Management Act, which traditionally requires card-based payments. The introduction of token-based payments is expected to enhance oversight, as these can be programmed with specific conditions such as spending limits and restrictions on which industries can utilize them. This could lead to a decrease in manual audits, particularly for spending that occurs outside regular hours. Additionally, the removal of intermediaries like card networks may result in lower transaction fees for small businesses receiving government payments, according to the ministry. This initiative marks the second instance of deposit tokens being used in Treasury operations, following a previous 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 for expansion if the program demonstrates improved control over spending and significant cost savings.