South Korea’s Shinhan Bank is preparing to conduct a stablecoin international remittance proof of concept (PoC) on the Hedera network, in partnership with South Africa’s Standard Bank.
The PoC will use the Hedera Token Service (HTS) and Hedera Consensus Service (HCS). The project aims to test the issuance and distribution of stablecoins, applied to a financial use case.
The test will use a scenario which, the bank says, typically suffers from high fees, longer wait times, and the absence of tracking features.
With the stablecoin solution developed by the banks, individuals and organisations can send and receive funds in a locally denominated stablecoin, with low fees.
Shinhan plans to mint South Korean won (KRW)-backed stablecoins. Users will be able to buy Shinhan’s KRW-based stablecoin and send them to an account at Standard Bank.
Recipients will be able to receive the funds in a locally denominated stablecoin and exchange it for the local currency. The two banks will use HCS both to track and record transactions and confirm the FX rate at the time of each transaction.
Mance Harmon, CEO and co-founder of Hedera, says: “International remittances were a massive market of $702 billion in 2020, with $539 billion going to low- and middle-income countries.
“There is a massive opportunity to cut out the middleman and make this process dramatically more efficient and cost-effective, getting the most money possible to people who often need it urgently.”
Shinhan Bank has been a leader in leveraging distributed ledger technology (DLT) to drive financial innovation.
In January 2021, it invested in Korea Digital Asset Custody (KDAC), an industry consortium of businesses that provides digital-asset custody services.
In March, the bank completed a demonstration platform for central bank digital currencies (CBDCs), together with LG CNS. The company joined the Hedera Governing Council in April 2021.
The Hedera network is governed by a council that includes companies such as Boeing, Deutsche Telekom, FIS (WorldPay), Google, IBM, the Indian Institute of Technology (IIT), ServiceNow, and Tata Communications.