South Korea Plans Q4 Trial of Blockchain-Based Tokens for Government Expenditures

As part of a larger effort 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 a 2026 regulatory sandbox program, allowing it to use digital currency to disburse Treasury funds. This move will enable the use of tokenized deposits to cover business promotion expenses, which are currently paid using government purchasing cards. By operating in a sandbox environment, government agencies will be able to temporarily bypass existing rules governed by the Treasury Funds Management Act, which traditionally require card-based payments. The introduction of token-based payments is expected to enhance oversight, as these payments can be programmed with specific conditions such as spending limits and industry restrictions. This could lead to a reduction in manual audits, particularly for spending that occurs outside regular hours. Furthermore, the removal of intermediaries like card networks is anticipated 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 is scheduled to take place in Sejong City, with participating firms to be selected through a formal process. If the program demonstrates improved control over spending and yields significant cost savings, the ministry plans to expand it.