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NongHyup Bank, a major player in South Korea, is teaming up with Fireblocks. They’re working on a crypto prototype to tokenize VAT and other tax refund processes. This partnership was formalized through a memorandum of understanding signed recently.
Fireblocks will provide the support NH Bank needs to integrate digital assets into its VAT refund processes and generation-skipping transfer tax, which affects capital transfers to descendants.
Lee Seok-yong, the President of NH Bank, expressed, “This MoU marks a pivotal step for NH Bank as we strive to deliver innovative blockchain-powered services to our customers.” He emphasized the bank's goal of introducing more digital asset offerings.
This initiative follows a trend among banks globally that are exploring blockchain for better efficiency. For instance, Shinhan Bank, the second-largest commercial bank in South Korea, is testing blockchain to reduce human errors. Many other banks have also launched crypto services in recent years.
South Korea is known as one of the largest cryptocurrency markets worldwide. It hosts major firms like Bithumb and Upbit. The country has been proactive in establishing regulations for cryptocurrency and recently introduced stricter consumer protection guidelines for virtual asset service providers.
Michael Shaulov, CEO and Co-founder of Fireblocks, stated, “This collaboration not only pioneers the use of blockchain in financial services, such as tax refunds, but also sets the stage for broader adoption of secure, blockchain-powered solutions across the banking sector.”
In South Korea, the value-added tax is 10%, with VAT return fees ranging from 3% to 6%. Fireblocks has reportedly facilitated the transfer of $6 trillion in crypto assets, serving a diverse clientele that includes exchanges, lending desks, custodians, banks, trading desks, and hedge funds.
In addition to the tax refund pilot, NH Bank is looking to explore other blockchain-driven projects within its ecosystem and create pathways for collaboration with financial institutions globally.