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 deposit tokens for government expenditure in the fourth quarter, as part of a larger effort to revolutionize the management of public funds. According to local media reports, the ministry's pilot project to utilize digital currency for Treasury fund expenditure has been approved under the 2026 regulatory sandbox program. This approval enables the use of tokenized deposits for business promotion expenses, which are currently processed using government purchasing cards. By operating within a sandbox environment, government agencies will be able to test new methods outside the constraints of the existing Treasury Funds Management Act, which traditionally requires card-based payments. The introduction of token-based payments is expected to enhance oversight, as these payments can be programmed with predefined conditions such as spending limits and restrictions on eligible industries. This could lead to a reduction in manual audits, particularly for expenditures that occur outside regular hours. Furthermore, the elimination of intermediaries such as card networks is anticipated to lower transaction fees for small businesses receiving government payments. This initiative marks the second instance of deposit tokens being utilized in Treasury operations, following a previous pilot project 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 enhanced control over expenditure and measurable cost savings.