From theblock by Daniel Kuhn

Ethereum infrastructure provider Fireblocks has been tapped by NongHyup (NH) Bank to provide support for a crypto prototype the South Korean bank is building. The two companies signed a memorandum of understanding, a non-binding agreement between the parties that outlines their intention to work together. 

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

“This MoU marks a pivotal step for NH Bank as we strive to deliver innovative blockchain-powered services to our customers,” Lee Seok-yong, President of NH Bank, said in a statement, adding the bank is looking to introduce additional “new digital asset offerings.”

The move marks the latest global bank to explore blockchain technology for operational efficiency. For instance, South Korea’s second-largest commercial bank, Shinhan Bank, is testing using blockchain to decrease human error while a number of others introduced crypto services in recent years.

South Korea, often estimated to be one of the largest cryptocurrency markets in the world, is home to a number of the largest crypto firms including Bithumb and Upbit. The country was early in imposing legislation tailored to crypto regulation and recently introduced more rigid consumer protection guidelines for virtual asset service providers.

“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,” Michael Shaulov, CEO and Co-founder of Fireblocks, said.

The country’s value added tax is 10% while the fee for VAT return ranges between 3% to 6%. 

Fireblocks has reportedly enabled the transfer of $6 trillion worth of crypto assets. Its customer base includes exchanges, lending desks, custodians, banks, trading desks and hedge funds.

In addition to the tax refund pilot, NH Bank is looking to identify other “blockchain-driven projects within NH Bank’s ecosystem, as well as creating pathways for collaboration with financial institutions globally.”