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

As part of its efforts to modernize public fund management, South Korea's Ministry of Economy and Finance is set to launch a trial of blockchain-based deposit tokens for government expenditure in the fourth quarter. According to local media reports, the ministry has obtained approval for a pilot program to utilize digital currency for Treasury fund expenditures under the 2026 regulatory sandbox initiative. This development enables the use of tokenized deposits to cover business promotion expenses, which were previously processed using government-issued purchasing cards. By operating within a sandbox environment, government agencies can temporarily bypass existing regulations, such as the Treasury Funds Management Act, to test innovative approaches. The introduction of token-based payments is expected to enhance oversight, as these payments can be programmed with predefined conditions, including time limits and industry-specific restrictions. This could significantly reduce the need for manual audits, particularly in cases where spending occurs outside regular hours. Furthermore, the removal of intermediaries, such as card networks, may lead to lower transaction fees for small businesses receiving government payments. This marks the second instance of deposit tokens being used 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, with plans for expansion if the program demonstrates improved spending control and measurable cost savings.