South Korea’s push to develop blockchain is quite evident from the spree of developments in that sector. In its most recent efforts, the nation’s central bank has signed a memorandum of understanding (MoU) with the nation’s Financial Settlement Service the Korea Financial Settlement Service (KFSS), to take charge of blockchain authentication certificate service BankSign.
As reported by local media outlet The News Asia, acquiring the blockchain certification service is another step for the Bank of Korea towards commercializing blockchain in banking.
The platform, launched back in August 2018, was the result of a collaboration between Samsung SDS, a subsidiary of the electronics giant, and the Korean Federation of Banks. BankSign leverages blockchain technology to co-verify and transfer customer authentication data among banks and other financial institutions.
BankSign wasn’t of much use in the nation prior to this due to the “Digital ID” (DID) framework that existed for 21 years. However, the regulators soon discontinued the service in May with the revised Electronic Signature Act passed by the National Assembly.
The system made it challenging to implement the proper delivery
The central bank now plans to deploy BankSign as a replacement for its DID system, as the worldwide COVID-19 pandemic is forcing digital alternatives for face-to-face operations. The pandemic has boosted the use of blockchain technology across several sectors to allow organizations to carry on daily operations on a secure digital space.
A BOK official highlighted the various use cases of BankSign over other alternatives, adding:
“I expect that through cooperation, we will be able to realize cost reduction, service improvements, and discovery of new businesses.”
Bank of Korea, along with the KFSS, plans on completely replacing the digital ID framework by the end of 2020. The new system is expected to substantially reduce operational costs, improve consumer experience with value-added services, and assist banks in discovering new and potential revenue streams.
South Korea, Blockchain, and Crypto
The news comes days after the South Korean National Assembly hosted a seminar titled “How to boost transparency in cryptocurrency transactions.” The seminar focused on topics such as money-laundering prevention and the inception of a system that oversees the crypto industry in the nation.
South Korea also launched a pilot program last month, to develop a blockchain-powered registry that’ll analyze, anonymize, and store clinical data for diabetes.
Starting in 2021, the South Korean government also decided to tax cryptocurrency trading based on capital gains. It has been considering taxing crypto ever since a Joint Task Force (TF) was formed following the massive bull run of 2017.
With the new tax laws, crypto exchanges in the nation would be providing detailed information regarding a customer’s trading activities, also reducing the risks of illegal activities like money laundering.