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

As part of a larger effort to modernize the management of public funds, South Korea's Ministry of Economy and Finance is set to launch a pilot program in the fourth quarter, testing the use of blockchain-based deposit tokens for government spending. According to local media reports, the ministry has received approval for the pilot under a 2026 regulatory sandbox program, allowing it to utilize digital currency for Treasury fund expenditures. The trial will enable the use of tokenized deposits for business promotion expenses, which are currently processed using government purchasing cards. By operating within a sandbox environment, government agencies will be able to temporarily bypass the rules governed by the Treasury Funds Management Act, which traditionally required card-based payments. The introduction of token-based payments is anticipated to enhance oversight, as these payments can be programmed with predefined conditions such as spending limits and industry-specific usage. This is expected to reduce the need for manual audits, particularly when spending occurs outside standard hours. The removal of intermediaries, such as card networks, is also expected to lower transaction fees for small businesses receiving government payments. This pilot program marks the second instance of deposit tokens being used in Treasury operations, following an earlier trial related to subsidies for electric vehicle-charging infrastructure. The pilot is scheduled to take place in Sejong City, following a selection process for participating firms. If the program demonstrates improved control over spending and measurable cost savings, the ministry plans to expand it.