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, exploring the use of blockchain-based tokens for government expenditure as part of a larger effort to modernize public fund management. According to local reports, the initiative has been approved under the 2026 regulatory sandbox program, enabling the use of digital currency for Treasury fund expenditure. This development will allow businesses to utilize tokenized deposits for promotional expenses, which are currently processed via government-issued purchasing cards. By operating within a sandbox environment, government agencies can temporarily bypass existing regulations to test innovative methods. Officials anticipate that this shift will enhance oversight, as token-based payments can be predefined with specific conditions such as spending limits and industry restrictions. This could lead to a reduction in manual audits, particularly for transactions occurring 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 program tied to subsidies for electric vehicle-charging infrastructure, this marks the second instance of deposit tokens being used in Treasury operations. The trial is scheduled to take place in Sejong City, with participating firms to be selected through a rigorous process. If the program yields positive results in terms of spending control and cost savings, the ministry plans to expand it further.