South Korea to Pilot Blockchain-Based Tokens for Government Expenditures in Q4

The South Korean Ministry of Economy and Finance is set to launch a trial of blockchain-based deposit tokens for government spending in the fourth quarter, as part of a larger effort to modernize public fund management. According to local reports, the ministry has secured approval for the pilot under the 2026 regulatory sandbox program, enabling the use of digital currency for Treasury fund expenditures. This innovative approach will replace the traditional government purchasing card system for business promotion expenses, leveraging tokenized deposits instead. By operating within a sandbox environment, agencies can temporarily bypass existing regulations to test novel methods. Officials anticipate that this shift will enhance oversight, as token-based payments can be pre-programmed with specific conditions, such as spending limits and industry restrictions, potentially reducing the need for manual audits. Additionally, the removal of intermediaries like card networks may lead to lower transaction fees for small businesses receiving government payments. Following a previous pilot involving electric vehicle-charging infrastructure subsidies, this trial will be conducted in Sejong City after a selection process for participating firms, with plans for expansion if the program demonstrates improved spending control and cost savings.