Fireblocks, a leading digital asset platform, has announced a strategic partnership with NongHyup Bank, one of South Korea’s largest banks. Together, they are embarking on an innovative project that uses blockchain technology to tokenize value-added tax (VAT) and goods and services tax (GST) refunds.
Tokenization of Tax Refunds: A Step Towards Transparency and Security
In this collaboration, Fireblocks will leverage its Tokenization Engine to create a pilot project aimed at enhancing the VAT and GST refund process in South Korea. The goal is to offer a more secure, transparent, and efficient system for handling tax refunds on purchases at retail outlets.
According to Fireblocks’ CEO, Michael Shaulov, tokenization will allow for real-time tracking of assets, reducing the risk of manual errors and fraud. By assigning unique digital identifiers to assets, the process of tracking VAT refunds becomes more streamlined, and both banks and clients can benefit from an immutable, secure record.
The Benefits of Tokenization for VAT Refunds
South Korea imposes a flat VAT rate of 10%, with exceptions for medical and unprocessed food products, as well as for tourists on certain purchases. With the new tokenization system, both the administrative costs associated with VAT refunds and the potential for fraud can be minimized.
The pilot project also aligns with Fireblocks’ ongoing commitment to providing secure blockchain-powered solutions. Tokenizing tax refunds could provide greater efficiency, transparency, and trust between customers and financial institutions.
Future Collaboration Between Fireblocks and NongHyup Bank
This collaboration marks a pivotal step for NongHyup Bank, which serves over 10 million customers. In addition to VAT tokenization, both companies are exploring further blockchain-powered financial services to offer enhanced solutions to their clients.
NongHyup Bank President Lee Seok-yong expressed excitement about the partnership, emphasizing the bank’s goal to integrate innovative, blockchain-based services into its offerings. The collaboration not only strengthens the bank’s digital capabilities but also positions it at the forefront of the rapidly evolving blockchain space.
Fireblocks Expands Beyond Custody Solutions
Fireblocks is well-known for its custody solutions, helping businesses securely transfer, store, and issue digital assets. The company has successfully facilitated over $6 trillion in digital asset transfers. However, the partnership with NongHyup Bank highlights Fireblocks’ expansion into new areas, such as blockchain-powered financial services.
In addition to its custodial services, Fireblocks has been exploring derivatives and trading products in collaboration with Coinbase International and launched a Web3 kit for startups in mid-2024.
