Digital assets platform Fireblocks has signed a Memorandum of Understanding (MoU) with NongHyup Bank, a large South Korean bank specializing in commercial credit and banking services for the agricultural sector. They hope to launch a prototype for tax refunds.
Innovative tokenization of taxes
Fireblocks and NongHyup Bank will use the Fireblocks Tokenization Engine in a pilot project to refund value-added tax (VAT) and goods and services tax (GST) on purchases at retail outlets. Fireblocks co-founder and CEO Michael Shaulov told Cointelegraph that they are looking to increase transparency and security. He said:
“Through tokenization, we can assign unique digital identifiers to assets, allowing for real-time tracking across their lifecycle — from issuance to settlement — without the risk of manual error or fraud.”
“This not only reduces operational costs but also ensures a secure, immutable record that strengthens trust between banks and their clients,” he added.
VAT is a flat 10% in South Korea. Certain products, such as medical supplies and unprocessed food supplies, are exempt from the VAT and tourists are exempt from it for all except the smallest of purchases. The fee for VAT return can range from 3% to 6% of an item’s cost.
NongHyup Bank and Fireblocks will look for other opportunities for collaboration as well. Bank president Lee Seok-yong said in a statement, “This MoU marks a pivotal step for NH Bank as we strive to deliver innovative blockchain-powered services to our customers.” The bank has over 10 million customers.
Major South Korean banks have shown an interest in blockchain and digital assets comparatively for several years.
Related: DeFi’s ‘unknown and unpredictable’ risks curb institutional use — Fireblocks VP
Fireblocks expanding beyond custody
Fireblocks offers custody solutions and helps blockchain projects securely move, store and issue digital assets. It accommodates wallets, custodians and trading partners on a single platform and claims to have securely transferred over $6 trillion in digital assets
Source: Fireblocks
The company is branching off in new directions. For example, it began offering derivatives and trading products to institutional and retail investors in a partnership with Coinbase International in June. It launched a Web3 kit for startups in July.