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 pilot program in the fourth quarter to test the use of blockchain-based deposit tokens for government spending, as part of a larger effort to modernize public fund management. According to local media reports, the ministry has received approval for the pilot under a 2026 regulatory sandbox program, which will enable the use of digital currency for Treasury fund expenditure. The pilot program will replace the traditional government purchasing card system for business promotion expenses with tokenized deposits, marking a significant shift from the long-standing Treasury Funds Management Act, which previously mandated card-based payments. By operating in a sandbox environment, government agencies will be able to test new methods outside of the existing regulatory framework on a limited basis. Officials anticipate that the new system will enhance oversight, as token-based payments can be programmed with predefined conditions such as spending limits and industry-specific usage, potentially reducing the need for manual audits, particularly outside standard working hours. The removal of intermediaries, such as card networks, is also expected to lower transaction fees for small businesses receiving government payments, according to the ministry. This initiative marks the second instance of deposit tokens being used in Treasury operations, following a previous pilot program for electric vehicle-charging infrastructure subsidies. The trial is scheduled to take place in Sejong City, following a selection process for participating firms, with plans to expand the program if it demonstrates improved control over spending and achieves significant cost savings.