Digital asset platform Fireblocks has signed a Memorandum of Understanding (MoU) with NongHyup Bank (NH Bank), one of South Korea’s largest financial institutions specializing in commercial credit and services for the agricultural sector. The partnership aims to explore innovative uses of blockchain technology, with a pilot project focused on revolutionizing tax refunds through tokenization.
Fireblocks and NongHyup Bank are collaborating to launch a pilot project using Fireblocks’ Tokenization Engine to streamline the refund process for value-added tax (VAT) and goods and services tax (GST) on purchases made at retail outlets. The initiative will utilize blockchain’s secure and transparent features to improve the efficiency and security of VAT/GST refund transactions.
According to Michael Shaulov, co-founder and CEO of Fireblocks, the goal of this project is to enhance transparency and security in the tax refund process. By tokenizing VAT and GST refunds, the companies can assign unique digital identifiers to assets, enabling real-time tracking throughout their lifecycle, from issuance to settlement. This process minimizes the risk of manual errors or fraud, reduces operational costs, and creates a secure, immutable record of transactions.
"Through tokenization, we can assign unique digital identifiers to assets, allowing for real-time tracking across their lifecycle — from issuance to settlement — without the risk of manual error or fraud," Shaulov explained. "This not only reduces operational costs but also ensures a secure, immutable record that strengthens trust between banks and their clients."
South Korea’s VAT is a flat 10%, with exemptions for certain items like medical supplies and unprocessed food, as well as for tourists, who are exempt from VAT on all but the smallest purchases. The VAT refund fee typically ranges from 3% to 6% of the total item cost, and this partnership seeks to make the process more transparent and efficient using blockchain technology.
The pilot project is just the beginning of Fireblocks’ and NongHyup Bank’s collaboration. Both entities are also exploring other potential areas where blockchain can add value, with NongHyup Bank keen to expand its blockchain-powered services. Lee Seok-yong, president of NongHyup Bank, emphasized the importance of this MoU in the bank’s strategic efforts to deliver cutting-edge, blockchain-powered financial services to its 10 million customers.
“This MoU marks a pivotal step for NH Bank as we strive to deliver innovative blockchain-powered services to our customers,” Lee stated. South Korea’s banking sector has shown increasing interest in blockchain and digital assets in recent years, and this partnership further strengthens the country’s position as a global leader in financial technology.
Fireblocks is well known for its secure custody solutions, helping institutions manage, store, and move digital assets. The company’s platform has supported over $6 trillion in digital asset transfers and caters to a broad spectrum of clients, including custodians, wallets, and trading partners. However, Fireblocks is expanding beyond traditional custody services to offer a broader range of products.
In June 2024, Fireblocks entered into a partnership with Coinbase International to offer derivatives and trading products to both institutional and retail investors. This move signals Fireblocks’ desire to offer comprehensive solutions that address the growing demand for crypto trading and investment products.
Additionally, in July 2024, Fireblocks launched a Web3 kit aimed at helping startups build and scale their blockchain-based products. The kit provides a suite of tools to streamline Web3 development, from tokenization to asset management and security, helping entrepreneurs quickly integrate blockchain into their business models.
The partnership between Fireblocks and NongHyup Bank marks a significant milestone in the integration of blockchain technology into South Korea’s financial services sector. By applying tokenization to VAT and GST refunds, the collaboration aims to enhance transparency, security, and efficiency in tax refund processes. The two companies also plan to explore further blockchain innovations, underscoring the growing trend of blockchain adoption in traditional banking.
Fireblocks’ expansion into new markets, including derivatives, Web3 development tools, and more, highlights the company's ambition to redefine how digital assets are stored, traded, and utilized across a wide range of industries. As blockchain continues to gain traction in the financial world, partnerships like this one are paving the way for more widespread adoption and innovation in both traditional and digital finance sectors.
November 2024, Cryptoniteuae