Starting from the first half of this year, 27 major securities companies in South Korea will begin the country’s first blockchain-based overseas remittance service. A number of securities firms will jointly use a closed blockchain network established jointly by the Korea Financial Investment Association (KOFIA) and the industry. The network allows them to transfer money overseas without cryptocurrencies.
KOPIA said on Feb. 20 that 27 securities firms, about half of the 56 brokerages in business in South Korea, have shown their intentions to participate in jointly building the global remittance system until now. They include not only small and mid-sized securities firms but also large ones. South Korea’s overseas remittance market is currently worth 14 trillion won (US$12.46 billion) a year.
This service is attractive as securities firms can avoid the inconvenience of having to make a contract with their partner banks one by one. This project is jointly promoted with fintech firm CoinOneTransfer
There are no financial companies in Korea that have started overseas remittance service by setting up a blockchain network yet. The banking industry’s blockchain authentication system called “BankSign” was established last year, led by the Korea Federation of Banks (KFB), but it is not in use due to banks’ decision to delay its use. They are discouraged from using it due to regulatory burdens. In addition, banks are individually seeking to cooperate with fintech companies so they are not expected to begin overseas remittance services through BankSign.
KOFIA’s blockchain network is free from regulations because it operates without cryptocurrencies. KOPIA and securities firms jointly established the blockchain-based authentication system “ChainID” in October 2017.