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 trial of blockchain-based deposit tokens for 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 secured approval for a pilot program to utilize digital currency for Treasury fund expenditure under the 2026 regulatory sandbox initiative. This move will enable the use of tokenized deposits to cover business promotion expenses, which are currently processed using government-issued purchasing cards. By doing so, the ministry aims to improve oversight and reduce the need for manual audits, particularly for transactions that occur outside regular hours. The token-based system allows for predefined conditions, such as spending limits and industry-specific usage, to be programmed into the tokens. Additionally, the removal of intermediaries like card networks is expected to lower transaction fees for small businesses receiving government payments. This trial 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, with the ministry planning to expand the program if it yields positive results in terms of enhanced spending control and cost savings.