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 larger 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. This move will replace the traditional government purchasing card system for business promotion expenses with tokenized deposits. By operating in a sandbox environment, government agencies will be able to temporarily bypass existing regulations to test new methods. Officials anticipate that this change will enhance oversight, as token-based payments can be programmed with predefined conditions such as spending limits and industry-specific usage. This is expected to reduce the need for manual audits, particularly for spending that occurs outside regular hours. The new system will also remove intermediaries like card networks, potentially reducing transaction fees for small businesses that receive government payments. This is the second instance of deposit tokens being used in Treasury operations, following a previous pilot related to subsidies for electric vehicle-charging infrastructure. The trial will be conducted in Sejong City after a selection process for participating firms, with plans to expand the program if it demonstrates improved control over spending and significant cost savings.