South Korea to Introduce Blockchain-Based Tokens for Public Expenditure in Q4

The South Korean Ministry of Economy and Finance is set to launch a pilot program for blockchain-based deposit tokens to manage government expenditure in the fourth quarter, 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 the 2026 regulatory sandbox program, allowing it to use digital currency for Treasury fund spending. The program will replace the traditional government purchasing card system for business promotion expenses with tokenized deposits. This move marks a significant shift from the longstanding Treasury Funds Management Act, which previously mandated card-based payments. In the sandbox environment, government agencies will be able to test new methods outside of the existing regulations. 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 minimize the need for manual audits, particularly for spending that occurs outside regular hours. By removing intermediaries like card networks, the ministry expects to lower transaction fees for small businesses that receive government payments. This is the second instance of using deposit tokens in Treasury operations, following a previous pilot program for electric vehicle-charging infrastructure subsidies. The trial will be conducted in Sejong City, with participating firms selected through a competitive process. The ministry plans to expand the program if it demonstrates improved control over spending and significant cost savings.