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

The South Korean Ministry of Economy and Finance is set to launch a trial of blockchain-based tokens for government expenditure in the fourth quarter, as part of a larger effort to modernize public fund management. According to local reports, the ministry has been granted approval under the 2026 regulatory sandbox program to conduct a pilot using digital currency for Treasury fund expenditure. This move permits the use of tokenized deposits for business promotion expenses, which are currently processed via government purchasing cards. By operating within a sandbox environment, agencies can temporarily bypass existing regulations to test novel approaches. Officials anticipate that this shift will enhance oversight, as token-based payments can be programmed with specific conditions such as spending limits and industry restrictions, potentially reducing the necessity for manual audits. Furthermore, the removal of intermediaries like card networks may lead to lower transaction fees for small businesses receiving government payments. Following a previous pilot related to subsidies for electric vehicle-charging infrastructure, this marks the second instance of deposit tokens being used in Treasury operations. 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.