South Korea’s Largest Bank Pilots Stablecoin VAT Refunds – A Crypto Game Changer?
Seoul shakes up tax rebates with blockchain tech as KB Kookmin Bank tests stablecoin-powered VAT refunds for tourists. No more airport queues—just instant digital reimbursements.
Why it matters: Traditional finance finally embraces crypto's speed. The pilot could slash processing times from weeks to seconds, proving blockchain's real-world utility beyond speculative trading.
The cynical take: Banks love stablecoins when they control the rails—just don't mention decentralized alternatives. A win for efficiency, but is it really a win for crypto's ethos?
NH NongHyup aims to lead in the digital transformation of Korea’s tourism economy
In a statement, Choi Woon-jae, the executive vice president of NH NongHyup Bank, stated that the refund model based on stablecoins demonstrates how blockchain technology can actually enhance national competitiveness and boost customer experience.
Therefore, with this ability in mind, Choi outlined their goal: to secure the top ranking in the digital transformation of Korea’s tourism economy by implementing strategies like enhancing cross-border payment and settlement efficiency.
The PoC, on the other hand, focuses on attracting the booming tourist volume visiting South Korea by streamlining the VAT refund process. Sources pointed out that this process is essential as it enables foreign tourists to reclaim the VAT, usually 10%, they paid on eligible items when they decide to take them out of the country.
Meanwhile, it is worth noting that in 2024, South Korea welcomed approximately 16.37 million tourists into the country. This figure represented a significant increase of about 48.4% compared to the previous year.
Concerning NH NongHyup’s intention to modernize the traditional paper-based tax refund system, the bank stated that this initiative will be delivered in two main ways. To begin with, the PoC will thoroughly investigate a digital system based on blockchain technology that automates the tracking of refund data. This method will make it easier and more efficient for both businesses and tourists.
For the Second method, NongHyup highlighted that the process will include a test on a method using stablecoins to allow users to effectively exchange currency and make their payments.
Being a key player in the financial sector, with a broadened customer base and significant assets, NH NongHyup made public its intentions to improve its refund services and stablecoin payment while strictly adhering to new regulatory guidelines from financial authorities.
South Korea’s financial regulators focus on the development of new laws for won-pegged stablecoins
Sources knowledgeable about NH NongHyup’s proof-of-concept mentioned that South Korea is developing regulations to promote a stablecoin market linked to the Korean won. The MOVE is intended to increase its control over money matters, especially in the face of strong competition from US dollar stablecoins.
While financial regulators and local lawmakers cooperate toward these regulations being put in place for the won-pegged stablecoins, major banks and institutions are also preparing to launch their own stablecoin projects by cooperating with others and obtaining ticker symbols.
However, individuals who received this plan had mixed reactions. The Bank of Korea argued that it is wise for banks to be granted the opportunity to issue stablecoins, while private companies stated that non-bank organizations should be given the chance to establish stablecoins to achieve healthy competition and promote innovation in the market.
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