South Korea to Introduce Blockchain-Based Tokens for Government 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, testing the use of blockchain-based deposit tokens for government spending. According to local reports, the initiative has been approved under the 2026 regulatory sandbox program, enabling the use of digital currency for Treasury fund expenditures. The pilot aims to replace traditional government purchasing cards with tokenized deposits for business promotion expenses, thereby altering the existing system governed by the Treasury Funds Management Act. By operating in a sandbox environment, agencies can test new methods outside the conventional rules. The introduction of token-based payments is expected to enhance oversight, as these can be programmed with specific conditions such as spending limits and industry restrictions. 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 a previous pilot related to 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 after a selection process for participating firms, with plans for expansion if the program demonstrates improved spending control and significant cost savings.