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 allow for the use of digital currency to spend Treasury funds. The program will replace the traditional government purchasing card system for business promotion expenses with tokenized deposits. By operating outside the conventional rules governed by the Treasury Funds Management Act, agencies will be able to test new methods in a controlled environment. Officials anticipate that the new system will enhance oversight, as token-based payments can be programmed with specific conditions such as spending limits and designated industries. This is expected to reduce the need for manual audits, particularly for spending that occurs outside standard hours. Additionally, the removal of intermediaries like card networks is expected to lower transaction fees for small businesses receiving government payments. This pilot program marks the second instance of deposit tokens being used in Treasury operations, following an earlier trial related to subsidies for electric vehicle-charging infrastructure. The trial will be conducted in Sejong City, with participating firms selected through a designated process. If the program demonstrates improved control over spending and significant cost savings, the ministry plans to expand it further.