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 pilot program in the fourth quarter to test the use of blockchain-based tokens for managing government expenditure, as part of a larger effort to modernize public fund management. According to local reports, the ministry has obtained approval for the pilot under the 2026 regulatory sandbox program, allowing it to utilize digital currency for Treasury fund expenditure. The approved pilot will enable the use of tokenized deposits for business promotion expenses, which are currently processed using government purchasing cards. This move marks a significant shift from the traditional system governed by the Treasury Funds Management Act, which mandated card-based payments. By operating in a sandbox environment, agencies will be able to test new methods outside the existing regulatory framework on a limited basis. Officials anticipate that the introduction of token-based payments, which can be programmed with predefined conditions such as spending limits and industry restrictions, will enhance oversight and reduce the need for manual audits. Furthermore, the removal of intermediaries like card networks is expected to lower transaction fees for small businesses receiving government payments. This initiative follows an earlier pilot program that utilized deposit tokens for subsidies related to electric vehicle-charging infrastructure. The trial is scheduled to take place in Sejong City, with participating firms to be selected through a designated process. The ministry plans to expand the program if it yields positive results in terms of spending control and cost savings.