South Korea to Pilot Blockchain-Based Tokens for Government Expenditure in Q4

As part of its efforts to modernize public fund management, South Korea's 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. According to local media reports, the ministry has received approval for the pilot under the 2026 regulatory sandbox program, which will allow the use of digital currency to spend Treasury funds. The pilot program will enable the use of tokenized deposits to pay for business promotion expenses, which are currently processed using government purchasing cards. This move marks a significant shift from the traditional system governed by the Treasury Funds Management Act, which required the use of card-based payments. The sandbox environment will allow agencies to test new methods outside of these rules on a limited basis. Officials anticipate that the new system will enhance oversight, as token-based payments can be programmed with specific conditions such as spending limits and industry restrictions. This could reduce the need for manual audits, particularly when spending occurs outside of regular hours. Additionally, the system eliminates intermediaries like card networks, which could lead to lower transaction fees for small businesses receiving government payments, according to the ministry. 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 is scheduled to take place in Sejong City after a selection process for participating firms, and the ministry plans to expand the program if it demonstrates improved control over spending and significant cost savings.