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 trial of blockchain-based tokens for government expenditure in the fourth quarter, as part of a larger effort to modernize public fund management. According to local reports, the ministry has secured approval for a pilot program to utilize digital currency for Treasury fund expenditures under the 2026 regulatory sandbox initiative. This development allows for the use of tokenized deposits to cover business promotion expenses, which are currently processed using government-issued purchasing cards. By operating within a sandbox environment, government agencies can temporarily bypass existing regulations to test novel approaches. The introduction of token-based payments, which can be programmed with predefined conditions such as spending limits and industry-specific usage, is expected to enhance oversight and reduce manual audits. Furthermore, the removal of intermediaries like card networks may lead to lower transaction fees for small businesses receiving government payments. This initiative marks the second instance of deposit tokens being used in Treasury operations, following a previous pilot program related to subsidies for electric vehicle charging infrastructure. The trial is slated to take place in Sejong City, with participating firms to be selected through a formal process. If the program demonstrates improved spending control and significant cost savings, the ministry plans to expand it further.