Hedera Network enables successful stablecoin payments test by Shinhan Bank.

Hedera Network enables successful stablecoin payments test by Shinhan Bank.

The Advancement of Stablecoin Remittance Payments on the Hedera Network

Source: AdobeStock / Punkbarby Source: AdobeStock / Punkbarby

The blockchain industry continues to make significant strides in revolutionizing various sectors, and one area that has seen notable progress is stablecoin remittance payments. Recently, Shinhan Bank, a leading South Korean commercial bank, completed a successful feasibility test for stablecoin remittance payments on the Hedera network. This achievement marks a significant milestone in the adoption of blockchain technology for cross-border transactions.

The Pilot and Achievements

Shinhan Bank’s pilot project involved collaboration with SCB TechX, the technology innovation business unit of Siam Commercial Bank. The pilot aimed to test the feasibility of real-time settlement and foreign exchange rate integration using stablecoins on the Hedera network. The pilot successfully facilitated remittance payments in Thai Baht (THB), New Taiwan dollar (NTD), and South Korean won (KRW).

The compatibility of the proof-of-concept (PoC) with the Ethereum Virtual Machine (EVM) is a crucial aspect of this achievement. By utilizing Hedera’s smart contract capabilities, the PoC enables any EVM-based stablecoin issuer to participate, providing a scalable and efficient framework for stablecoin remittances.

A Solution to Current Challenges

The motivation behind Shinhan Bank’s exploration of stablecoin remittance payments stems from the challenges faced by customers in the current financial system. Cross-border transfers between countries with limited liquidity and direct networks often result in high intermediary bank costs. Customers typically pay additional fees ranging from $20 to $80 on top of regular transfer fees. Moreover, these transactions can take 3-7 days to complete, lacking transparency and traceability.

The successful completion of the second PoC by Shinhan Bank and Hedera demonstrates the potential of blockchain technology to address these challenges. By eliminating intermediaries and reducing costs, the remittance process becomes faster and more transparent. With the stablecoin solution developed by the banks, individuals and organizations can send and receive funds in locally denominated stablecoins, resulting in remarkably low fees.

Promoting Financial Inclusion and Collaboration

The adoption of stablecoin remittance payments also has the potential to increase financial inclusion, particularly in underserved communities. Trirat Suwanprateeb, CEO of SCB TechX, highlights the low-cost, fast, and reliable nature of these assets, making them an ideal solution for transferring value across borders. By leveraging blockchain technology, financial institutions can bridge the gap and provide essential financial services to communities that were previously excluded.

Shinhan Bank’s pursuit of digital asset solutions is not limited to stablecoin remittance payments. The bank has been actively involved in various blockchain initiatives. In January 2021, Shinhan partnered with BitGo and Korea Digital Asset Trust (KDAC) to promote the development of crypto custody solutions and provide custodial services for digital assets. Additionally, the bank collaborated with LG CNS to create a joint pilot platform for central bank digital currencies (CBDC) in March 2021.

Conclusion

The successful completion of the stablecoin remittance payments pilot on the Hedera network by Shinhan Bank and SCB TechX marks a significant milestone in the blockchain industry. This achievement showcases the potential of blockchain technology in revolutionizing cross-border transactions, eliminating intermediaries, reducing costs, and increasing financial inclusion. As more banks and financial institutions explore the adoption of blockchain and distributed ledger technology, we can expect further advancements in the field of remittance payments and beyond.


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