South Korea to Pilot Blockchain-Based Tokens for Government Expenditure

The South Korean Ministry of Economy and Finance is set to launch a trial of blockchain-based tokens for government spending in the fourth quarter, as part of a larger effort to modernize public fund management. According to local media reports, the pilot program has been approved under a 2026 regulatory sandbox initiative, allowing for the use of digital tokens to pay for business promotion expenses, which are currently processed using government-issued purchasing cards. By leveraging tokenized deposits, the ministry aims to enhance oversight and streamline transactions. The tokens can be programmed with specific conditions, such as spending limits and eligible industries, potentially reducing the need for manual audits and lowering transaction fees for small businesses. This initiative marks 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, with plans for expansion if it demonstrates improved control over spending and significant cost savings.