South Korea's Shinhan Bank Successfully Completes Feasibility Test of Stablecoin Remittance Payments Using Hedera Network

South Korea's Shinhan Bank Successfully Completes Feasibility Test of Stablecoin Remittance Payments Using Hedera Network

Shinhan Bank, a major South Korean commercial bank operator, has successfully completed a feasibility test of stablecoin remittance payments on the Hedera network. This test was carried out in collaboration with SCB TechX, the innovation arm of Siam Commercial Bank.

The proof-of-concept pilot enabled real-time settlement and exchange rate integration for the Thai baht (THB), the new Taiwan dollar (NTD), and the South Korean won (KRW). The PoC leveraged Hedera's smart contract capabilities and was compatible with the Ethereum Virtual Machine (EVM). This will allow all EVM-based stablecoin issuers to participate in the framework in the future.

The collaboration between Shinhan Bank and Hedera began in November 2021 with the aim of enabling international stablecoin transfers. Hedera argued that in the current financial system, customers have to bear high interbank costs. Cross-border transfers between countries without sufficient liquidity and direct network result in additional intermediary fees of US$20-80 on top of regular transfer fees. In addition, the transactions take 3-7 days and are not transparent for the customer.

Kim Byunghee, Head of Blockchain Department at Shinhan Bank, highlighted the benefits of Hedera's EVM-compatible technology, which helps eliminate middlemen, reduce costs and speed up remittances. Hedera explained that the stablecoin solution developed by banks allows individuals and organizations to send and receive funds in a locally denominated stablecoin at remarkably low fees.

Trirat Suwanprateeb, CEO of SCB TechX, emphasized that such assets can provide a low-cost, fast and reliable way to transfer value across borders and improve financial inclusion in underserved communities.

Shinhan Bank has increased its focus on digital assets in recent years. In January 2021, the bank partnered with US crypto custody provider BitGo and Korea Digital Asset Trust (KDAC), backed by crypto exchange Korbit. This enabled the development of crypto custody solutions and the provision of digital asset custody services.

In March 2021, Shinhan presented a pilot platform for central bank digital currencies (CBDC) together with LG ZNS, the IT services arm of the electronics group LG. In April 2023, Shinhan became the first bank in South Korea to offer crypto account services to a corporate customer.

The collaboration between Shinhan Bank and Hedera for stablecoin transfers marks an important milestone for banks and institutions looking to explore the potential of blockchain and distributed ledger technology (DLT) for cross-border payments. Such solutions are expected to enable greater accessibility, security and interoperability for the emerging digital economy.