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

The South Korean Ministry of Economy and Finance is set to launch a pilot program in the fourth quarter to utilize blockchain-based tokens for government expenditure as part of its efforts to modernize public fund management. According to local reports, the ministry has received approval for the pilot under the 2026 regulatory sandbox initiative, which will enable the use of digital currency for Treasury fund spending. 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 can temporarily bypass existing regulations to test innovative approaches. The introduction of token-based payments, which can be programmed with specific conditions such as spending limits and industry restrictions, is expected to enhance oversight and reduce manual audits. Furthermore, by eliminating intermediaries like card networks, the ministry anticipates lower transaction fees for small businesses receiving government payments. This initiative marks the second instance of deposit tokens being used in Treasury operations, following a previous 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 plans for potential expansion if the program demonstrates improved spending control and cost savings.