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 government expenditures, as part of a larger effort to modernize public fund management. According to local reports, the ministry has received approval for the pilot under the 2026 regulatory sandbox initiative, which will allow for the use of digital currency to disburse Treasury funds. The program will enable the use of tokenized deposits to pay for business promotion expenses, which are currently processed using government-issued purchasing cards. This development marks a significant shift from the traditional system governed by the Treasury Funds Management Act, which mandated the use of card-based payments. Within the sandbox environment, government agencies will be permitted to operate outside of these regulations on a limited basis to test innovative approaches. Government officials anticipate that this change will enhance oversight and transparency. Token-based payments can be programmed with predefined parameters, including spending limits and restrictions on the industries that can accept them. This is expected to reduce the need for manual audits, particularly in instances where spending occurs outside of regular working hours. By removing intermediaries such as card networks from the transaction process, the ministry believes that transaction fees for small businesses receiving government payments will be lowered. 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, following a selection process for participating firms. If the program demonstrates improved control over expenditures and yields measurable cost savings, the ministry plans to expand it further.