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 expenditures, 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 the 2026 regulatory sandbox program, which will enable the use of digital currency for Treasury fund expenditures. The approval will allow for the replacement of traditional government purchasing cards with tokenized deposits for business promotion expenses. This move marks a significant shift from the existing system, which was governed by the Treasury Funds Management Act and relied on card-based payments. Within the sandbox environment, government agencies will be able to operate outside the existing rules on a limited basis to test innovative 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 when spending occurs outside regular hours. Additionally, the removal of intermediaries such as card networks is expected to lower transaction fees for small businesses receiving government payments. This pilot program follows an earlier trial that utilized deposit tokens for electric vehicle-charging infrastructure subsidies. The trial will be conducted in Sejong City, following a selection process for participating firms, and the ministry plans to expand the program if it yields improved spending control and measurable cost savings.