South Korea to Introduce Blockchain-Based Tokens for Government Expenditure in Q4

In the fourth quarter, South Korea's Ministry of Economy and Finance is set to launch a pilot program for testing blockchain-based deposit tokens in government spending, as part of a larger effort to modernize public fund management. According to local media reports, the ministry has received approval for the pilot under the 2026 regulatory sandbox program, which enables the use of digital currency for Treasury fund expenditure. This development allows for the replacement of traditional government purchasing cards with tokenized deposits for business promotion expenses. By operating within a sandbox environment, agencies will be able to temporarily bypass the constraints of the Treasury Funds Management Act, which previously mandated card-based payments. The introduction of token-based payments is expected to enhance oversight, as these payments can be programmed with predefined conditions such as spending limits and industry-specific acceptance criteria. This could lead to a reduction in manual audits, particularly in cases where spending occurs outside regular hours. Furthermore, the removal of intermediaries such as card networks is anticipated to lower transaction fees for small businesses receiving government payments. This initiative marks the second instance of deposit tokens being utilized 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, following a selection process for participating firms. If the program yields positive results in terms of spending control and cost savings, the ministry plans to expand it further.