South Korea to Pilot 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 larger effort to modernize the management of public funds. According to local media reports, the pilot program has been approved under the 2026 regulatory sandbox initiative, allowing for the use of digital currency to disburse Treasury funds. This move enables the substitution of traditional government purchasing cards with tokenized deposits for business promotion expenses. By operating within a sandbox environment, agencies can temporarily bypass existing regulations governed by the Treasury Funds Management Act, which previously mandated card-based payments. The new system is expected to enhance oversight, as token-based payments can be pre-programmed with specific conditions, such as spending limits and industry restrictions, potentially reducing the need for manual audits. Additionally, the elimination of intermediaries like card networks may lead to lower transaction fees for small businesses receiving government payments. This trial follows an earlier pilot program that utilized deposit tokens for subsidies related to electric vehicle-charging infrastructure. The upcoming trial is scheduled to take place in Sejong City, with plans for expansion if the program demonstrates improved spending control and significant cost savings.