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 pilot program in the fourth quarter, utilizing blockchain technology to issue deposit tokens for government expenditure as part of a larger initiative to enhance public fund management. According to local reports, the ministry has received approval for the pilot under the 2026 regulatory sandbox program, enabling the use of digital currency for Treasury fund expenditure. The approved pilot will allow for the use of tokenized deposits to cover business promotion expenses, which are currently processed using government purchasing cards. This development marks a significant shift from the traditional system governed by the Treasury Funds Management Act, which previously required card-based transactions. Within the sandbox environment, government agencies will be permitted to operate outside these rules on a limited basis, allowing them to test innovative methods. Authorities anticipate that this change will enhance oversight, as token-based payments can be programmed with predefined conditions such as spending limits and industry-specific acceptance criteria. This could lead to a reduction in manual audits, particularly for transactions that occur outside standard hours. Additionally, the system eliminates intermediaries such as card networks, which, according to the ministry, could result in lower transaction fees for small businesses receiving government payments. This is the second instance of deposit tokens being used in Treasury operations, following an earlier pilot 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, as stated in the report. The ministry plans to expand the program if it demonstrates improved control over expenditure and measurable cost savings.