South Korea to Pilot Blockchain Digital-Currency, QR Payments for Civil Servants’ Official Expenses at Six Banks

South Korea will launch a pilot program allowing government officials to pay office operating expenses, including business promotion costs, using blockchain-based digital currency and smartphone QR codes instead of physical cards.

The Ministry of Science and ICT said on September 22 that it had designated nine demonstration exemptions after convening the 45th Information and Communication Technology regulatory sandbox committee for new technologies and services in writing on September 21.

Among the approved cases was a “pilot program for Treasury fund disbursements using blockchain-based digital currency,” submitted by six banks: KB Kookmin Bank, NongHyup Bank, Shinhan Bank, Woori Bank, Industrial Bank of Korea and Hana Bank.

Under the National Treasury Management Act, government office operating expenses currently must be executed through government purchasing cards and similar payment tools. The exemption clears the way for officials to use smartphone QR codes, rather than physical cards, to pay business promotion costs and related expenses.

Blockchain-based digital currency would allow payment and settlement to be processed simultaneously while lowering fees, helping reduce the cost burden on small merchants. The system would also improve transparency in Treasury spending by restricting and managing, within the platform, the types of businesses where business promotion funds can be used.

The committee also approved demonstration projects to digitize administrative procedures for urban redevelopment work. It granted exemptions to EJM Company for an electronic notice and receipt system for redevelopment projects and for an electronic voting and online meeting service for residents’ general meetings held by promotion committees seeking to establish redevelopment associations. That would allow procedures ranging from notices to meeting resolutions to be handled online.

KT Corp. also received an exemption for a mobile electronic notification service using certified electronic document relay technology. Until now, certified electronic document intermediaries had been allowed to distribute only electronic documents created by other parties. Under the exemption, KT will be able to send customers mobile bills and other documents it generates itself.

Media Scope’s “mobile-linked open singing booth,” an existing demonstration exemption project, was converted to a temporary permit. The move followed a determination by the Ministry of Culture, Sports and Tourism that related laws and regulations need to be revised.

Bae Kyung-hoon, deputy prime minister and science minister, said the government is expanding the use of digital technology across public administration and everyday life. The ministry will actively provide opportunities for demonstration projects so innovative services in the field do not face difficulties entering the market because of existing regulations, he added.