Fireblocks Partners with NongHyup Bank for Crypto Prototype

Ethereum infrastructure provider Fireblocks has been tapped by NongHyup (NH) Bank to support a cryptocurrency prototype the South Korean bank is building. The two companies signed a memorandum of understanding (MoU), a non-binding agreement outlining their collaboration intentions.

NH Bank will use the Fireblocks Tokenization Engine to explore integrating digital assets into its VAT and other tax refund processes, which also includes the generation-skipping transfer tax process imposed on capital transfers to descendants.

Lee Seok-yong, President of NH Bank, stated, "This MoU marks a pivotal step for NH Bank as we strive to deliver innovative blockchain-powered services to our customers," and noted the bank's goal to introduce new digital asset offerings.

The agreement highlights a trend among global banks exploring blockchain technology for operational efficiency. For instance, Shinhan Bank, South Korea’s second-largest commercial bank, is testing blockchain to reduce human error, alongside numerous others introducing crypto services in recent years.

South Korea, one of the largest cryptocurrency markets globally, is home to major crypto firms like Bithumb and Upbit, and has implemented legislation tailored to crypto regulation, recently introducing more stringent 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."

South Korea's value-added tax is 10%, with VAT return fees ranging between 3% to 6%.

Fireblocks has facilitated the transfer of $6 trillion worth of crypto assets, with a customer base including exchanges, lending desks, custodians, banks, trading desks, and hedge funds.

Aside from the tax refund pilot, NH Bank aims to identify other blockchain-driven projects within its ecosystem, as well as create pathways for global collaboration with financial institutions.