South Korea to Introduce Blockchain-Based Tokens for Government 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 deposit tokens for 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 will enable the use of digital currency to spend Treasury funds. The approved pilot will allow business promotion expenses, currently processed using government purchasing cards, to be paid using tokenized deposits, thereby altering a long-standing system governed by the Treasury Funds Management Act that required card-based payments. In the sandbox environment, agencies will be able to operate outside these rules on a limited basis to test new methods, with officials expecting the change to enhance oversight. Token-based payments can be programmed with predefined conditions, including limits on when funds can be used and which industries can accept them, potentially reducing the need for manual audits, especially when spending occurs outside standard hours. By removing intermediaries such as card networks, the ministry believes that transaction fees for small businesses receiving government payments could be lowered. This marks the second instance of deposit tokens being used in Treasury operations, following an earlier pilot related to subsidies for electric vehicle-charging infrastructure. The trial is scheduled to take place in Sejong City after a selection process for participating firms, with the ministry planning to expand the program if it demonstrates improved control over spending and measurable cost savings.