South Korea’s Shinhan Bank, one of the largest banks in the country, has announced that it is testing a new payment system based on stablecoins and the Hedera network. The bank aims to provide faster, cheaper and more secure cross-border transactions for its customers.
Stablecoins are digital assets that are pegged to a fiat currency or a basket of assets and are designed to maintain a stable value. They are often used as a medium of exchange or a store of value in the crypto space, as they offer lower volatility and higher liquidity than other cryptocurrencies.
Hedera is a public distributed ledger platform that uses a novel consensus mechanism called Hashgraph, which claims to offer higher scalability, security and efficiency than traditional blockchain systems. Hedera also supports smart contracts, tokenization and decentralized applications.
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According to a press release, Shinhan Bank has partnered with Hexlant, a blockchain technology company, and Bitgo, a digital asset custody provider to develop and test the stablecoin payment system. The system will use the Korean won-backed stablecoin Terra KRW (KRT) as the payment medium and the Hedera network as the underlying infrastructure.
The bank said that the system will enable real-time settlement of cross-border transactions, as well as lower fees and enhanced transparency. The bank also said that the system will comply with the relevant regulations and standards, such as anti-money laundering (AML) and know-your-customer (KYC) policies.
Shinhan Bank is not the only financial institution that is exploring the potential of stablecoins and Hedera. In September 2020, Standard Bank Group, Africa’s largest bank by assets, announced that it was joining the Hedera Governing Council, a group of organizations that oversee the governance and development of the Hedera network. Standard Bank also said that it was developing a cross-border payment solution using stablecoins on Hedera.
The stablecoin payment system is part of Shinhan Bank’s broader digital transformation strategy, which aims to leverage emerging technologies such as blockchain, artificial intelligence and cloud computing to improve its products and services. The bank has also invested in various blockchain-related projects and startups, such as Ground X, the blockchain arm of Kakao Corp., and Blocko, a blockchain platform provider.
The bank said that the system will enable real-time cross-border payments, as well as domestic payments for e-commerce and other online services. The bank also said that the system will reduce transaction costs and risks, as well as enhance transparency and compliance.
Shinhan Bank is not the only financial institution that is exploring the potential of stablecoins and Hedera. In June, Standard Bank Group, Africa’s largest bank by assets, announced that it was developing a cross-border payment solution using Hedera and ZARt, a South African rand-backed stablecoin. In September, FIS Global, a leading provider of financial technology solutions, joined the Hedera Governing Council, a group of organizations that oversee the governance and development of the Hedera network.
The stablecoin payment system is part of Shinhan Bank’s broader digital transformation strategy, which aims to leverage emerging technologies such as blockchain, artificial intelligence and cloud computing to improve its products and services. The bank said that it will continue to collaborate with various partners to create innovative solutions for its customers.