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 trial of blockchain-based deposit tokens for government expenditure in the fourth quarter, as part of a larger effort to revolutionize public fund management. According to local news outlets, the ministry has received approval for a pilot program to utilize digital currency for Treasury fund expenditures under the 2026 regulatory sandbox initiative. This approval enables the use of tokenized deposits for business promotion expenses, which are currently processed via government purchasing cards. By transitioning to a token-based system, the government aims to enhance oversight and reduce the need for manual audits. The new system allows for the programming of predefined conditions, including spending limits and industry-specific restrictions, which can help minimize the need for manual audits, particularly in cases where spending occurs outside regular hours. Furthermore, the elimination of intermediaries such as card networks is expected to lower transaction fees for small businesses receiving government payments. This initiative marks the second instance of deposit tokens being used in Treasury operations, following a previous pilot program related to subsidies for electric vehicle-charging infrastructure. The trial is scheduled to take place in Sejong City, following a selection process for participating firms, and the ministry plans to expand the program if it yields stronger spending control and measurable cost savings.