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 deposit tokens for government expenditure in the fourth quarter, as part of a broader effort to modernize the management of public funds. According to local media reports, the ministry has obtained approval for a pilot program to utilize digital currency for Treasury fund expenditure under the 2026 regulatory sandbox initiative. This approval enables the use of tokenized deposits for business promotion expenses, which are currently processed using government purchasing cards. The introduction of this system marks a significant departure from the long-standing Treasury Funds Management Act, which mandated the use of card-based payments. Within the sandbox environment, agencies will be permitted to operate outside these rules on a limited basis to test innovative methods. Government officials anticipate that this change will enhance oversight, as token-based payments can be programmed with predefined conditions, including limitations on when funds can be utilized and which industries can accept them. This could lead to a reduction in the need for manual audits, particularly when expenditure occurs outside standard hours. Furthermore, the system eliminates intermediaries such as card networks, which the ministry believes could result in lower transaction fees for small businesses receiving government payments. This initiative represents the second instance of deposit token utilization in Treasury operations, following an earlier pilot project related to subsidies for electric vehicle-charging infrastructure. The trial is scheduled to take place in Sejong City after a selection process for participating firms, as stated in the report. The ministry plans to expand the program if it demonstrates enhanced control over expenditure and measurable cost savings.