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 trial of blockchain-based deposit tokens for government expenditure in the fourth quarter, as part of a broader initiative to modernize the management of public funds. According to local media reports, the pilot project, which involves the use of digital currency for Treasury fund expenditure, has been approved under the 2026 regulatory sandbox program. This approval enables the utilization of tokenized deposits for business promotion expenses, which are currently processed using government purchasing cards. By operating within a sandbox environment, agencies will be able to test new methods outside the constraints of the existing Treasury Funds Management Act, which previously mandated card-based payments. The introduction of token-based payments, which can be programmed with predefined conditions such as spending limits and industry-specific usage, is expected to enhance oversight and reduce the need for manual audits. Additionally, 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 used in Treasury operations, following an earlier pilot project 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, with plans for expansion if the program demonstrates improved control over expenditure and measurable cost savings.