Shinhan Bank and SCB TechX Achieve Milestone with Successful Stablecoin Remittance Pilot on Hedera Network

Shinhan Bank, SCB TechX, and Taiwan’s largest financial institution have successfully completed a stablecoin remittance proof-of-concept (PoC) pilot on the Hedera network, as announced on July 18th, 2023.

Shinhan Bank, a leading commercial bank in South Korea, boasts KRW 664.4 trillion in assets and serves 27 million customers. SCB TechX Co., Ltd., a digitally native, industry-leading platform-as-a-service business, provides innovative banking and non-banking services to commercial institutions and consumers throughout Southeast Asia.

The Hedera network, on which the pilot was conducted, is the most sustainable public ledger for the decentralized economy, built by a global community, and governed by a diverse council of industry-leading organizations.

The pilot, a major stride in the use of blockchain technology for cross-border payments, achieved real-time settlement and real-time foreign exchange (FX) rate integration across the Thai Baht (THB), New Taiwan dollar (NTD), and South Korean won (KRW). This was accomplished in a test environment that aligns with current production capabilities.

Notably, the PoC is EVM-compatible, opening the door for any EVM-based stablecoin issuers to participate using the framework in the future. This pilot is a continuation of Shinhan Bank’s previous work that began in 2021, when they partnered with Standard Bank on stablecoin international remittances.

Both Shinhan Bank and SCB TechX highlighted the potential of stablecoins in facilitating cross-border remittances. They emphasized that stablecoins offer a low-cost, fast, and reliable way to transfer value across borders. This could significantly increase financial inclusion and improve access to financial services for individuals and businesses in underserved communities.

Stablecoins, like the ones used in this pilot, are increasingly becoming a critical part of the crypto-asset ecosystem due to their frequent use in the trading of crypto-assets and as liquidity providers in Decentralized Finance (DeFi).

However, despite their name, stablecoins may not always be stable. Their stability is dependent on the management of their reserve assets, which if mismanaged, could lead to a loss of confidence and large-scale redemption requests, potentially leading to financial instability.

Despite these challenges, the use of stablecoins in cross-border remittances, as demonstrated by Shinhan Bank and SCB TechX, is a testament to their growing use cases.

However, the potential risks and cross-border nature of stablecoins call for the urgent implementation of effective regulatory, supervisory, and oversight frameworks before significant further interconnectedness with the traditional financial system occurs.


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Shinhan bank Opens Door to Corporate Crypto Accounts, Paving the Way for Institutional Adoption

As the first domestic lender on South Korean soil, Shinhan Bank has rolled out real-name corporate accounts to enable transactions from cash to crypto-based on its partnership with cryptocurrency exchange Korbit.

Local regulations made this venture a reality by allowing bank-partnered and licensed crypto exchanges to render cash-to-crypto services. 

Furthermore, the passage of the Reporting and Use of Certain Financial Transaction Information Act extended counter-terrorism and anti-money laundering financing regulations to digital asset service providers. 

The bank acknowledged that it averted such risks through the Shinhan-backed custody service KDAC. 

Digital asset custody is a service that safely manages and stores digital assets owned by various organizations and entities. Therefore, the corporations taking part in the project are chosen by Shinhan Bank and are members of Korea Digital Asset Custody (KDAC).

With the incoming South Korean President, Yoon Suk-yeol pledged of easing crypto regulations; analysis shows the market is on a solid path to being significantly legitimized.

As a result, local banks in the nation intend to ride this wave while seeking authorization to enter the crypto space through their representative body called the Korea Federation of Banks. 

The banks had raised concerns that the crypto market in the country could be monopolized because a “certain local crypto exchange” accounted for 90% of the market share. 

Given that crypto taxation has been a burning issue in South Korea since its parliament tabled a bill in 2020 where cryptocurrency gains would be slapped with a 20% gain, the incoming president vowed to zero tax crypto trading gains not exceeding 50 million won, approximately $40,000. 

Image source: Shutterstock


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South Korea’s largest bank joins Hedera Governing Council

Shinhan Bank, South Korea’s largest financial institution by total assets, has joined the governance council overseeing the Hedera network.

In an April 14 announcement, Shinhan announced it had become the latest member of the Hedera Governing Council to expand its efforts in the field of “digital transformation.” Hedera touts its hashgraph as an enterprise-grade blockchain platform capable of processing thousands of transactions per second.

Shinhan representatives emphasized growing client demand for enhanced efficiency and security in financial services, stating:

“Hedera’s public distributed ledger in particular is uniquely suited to meet the needs of a widely-used fintech service that must be fast, fair, secure, and enable the controls and visibility required by service providers.”

The bank will now begin integrating Hedera into its systems to “increase the efficiency of its internal processes.”

Shinhan, which ranked as the world’s 61st-largest bank with $478.5 billion in assets as of August 2020, is no stranger to distributed ledger technology, having built a variety of services on Hyperledger Fabric since 2017, including policy loan, interest rate swaps, and pension fund deals.

In March, Shinhan announced it had developed a blockchain-based pilot platform for testing a central bank digital currency, or CBDC, in partnership with LG Corporation’s IT services wing. The platform seeks to allow local banks to act as intermediaries for a CBDC.

Shinhan also invested in the local crypto custody consortium, Korea Digital Asset Trust, at the start of the year.

Hedera Hashgraph co-founder and CEO Mance Harmon, noted “increased interest from financial institutions and governments worldwide in DLT-based financial services” for payment systems and global settlement services.

“We are thrilled that Shinhan Bank has joined the Hedera Governing Council, and look forward to working with them to be on the leading edge of the future of finance,” Harmon added.

Hedera has expanded its global reach in recent months, with French utility giant Électricité de France joining its governing council in March, Standard Bank Group becoming its first African node operator in February, and Australia’s top debit infrastructure provider Eftpos joining the council after completing micropayments trials with Hedera last year.