South Korea to Introduce Blockchain-Based Tokens for Government 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 spending, as part of a broader effort to modernize public fund management. According to local media reports, the ministry has received approval for the pilot under a 2026 regulatory sandbox program, which will enable the use of digital currency for Treasury fund expenditures. The pilot program will allow business promotion expenses, currently processed using government purchasing cards, to be paid using tokenized deposits, thereby altering a long-standing system governed by the Treasury Funds Management Act. In the sandbox environment, government agencies will be able to operate outside the existing rules on a limited basis to test new methods. Officials anticipate that the new system will enhance oversight, as token-based payments can be programmed with predefined conditions such as spending limits and industry restrictions. This could reduce the need for manual audits, particularly when spending occurs outside standard hours. The system also eliminates intermediaries like card networks, which, according to the ministry, could lead to lower transaction fees for small businesses receiving government payments. This marks the second instance of using deposit tokens in Treasury operations, following an earlier pilot related to subsidies for electric vehicle-charging infrastructure. The trial will be conducted in Sejong City after a selection process for participating firms, according to the report. The ministry plans to expand the program if it demonstrates improved control over spending and measurable cost savings.