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

As part of its efforts to modernize public fund management, South Korea's 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 spending. According to local reports, the pilot has been approved under the 2026 regulatory sandbox program, enabling the use of digital currency for Treasury fund expenditures. This development allows for the replacement of traditional government purchasing cards with tokenized deposits for business promotion expenses. By operating outside the constraints of the Treasury Funds Management Act, agencies can test new methods in a controlled environment. The introduction of token-based payments is expected to enhance oversight, as these can be programmed with predefined conditions such as spending limits and industry-specific usage. This could lead to a reduction in manual audits, particularly for spending that occurs outside regular hours. Furthermore, the removal of intermediaries like card networks may result in lower transaction fees for small businesses receiving government payments. Following an earlier pilot for electric vehicle-charging infrastructure subsidies, this marks the second instance of deposit tokens being used in Treasury operations. The trial is scheduled to take place in Sejong City, with plans for expansion if the program demonstrates improved spending control and significant cost savings.