South Korean central bank acquires blockchain system

South Korean central bank acquires blockchain system

By Benson Toti - min read

The Bank of Korea has signed an MoU, taking over the management of a blockchain authentication certificate service named Bank Sign

The central bank of South Korea has signed a memorandum of understanding (MoU) with the Korea Financial Settlement Service over the transfer of management for Bank Sign — a blockchain authentication certificate service.

An article released by News Asia revealed that this move is the most recent step by the Bank of Korea (BOK) to push the country’s financial system towards a more robust digital framework. The BoK’s acquisition of Bank Sign is part of their plan to advance the commercialisation of blockchain technology in the banking sector.

Bank Sign was first launched by the Korean Federation of Banks and Samsung SDS back in August 2018. It is a co-verification system based on a blockchain that allows banks and other financial entities to transfer customer authentication data amongst one another.

While the existence of the country’s Digital ID (DID) framework seemed to overshadow Bank Sign’s capabilities, stakeholders have been clamouring for the abolition of the DID since 2018. The South Korean Parliament finally discontinued the service in May this year.

The BoK’s management of Bank Sign is an indication that the central bank plans on offering the service as a replacement for DID. Even as the MoU was undertaken, several entities within the private sector have been working feverishly on delivering services that could have served the same function.

Last June, KT, LG Uplus, and SK Telecom launched the PASS, an authentication platform based on the blockchain that traces driver’s licenses. Tech giants such as Kakao and Samsung are rumoured to be developing DID alternatives as well.

The search for a viable replacement for the DID system is of heightened importance for the country’s banking stakeholders, as they look to digital alternatives for physical operations.

The outbreak has pushed organizations to implement new systems that enable them to continue operations through the digital space. A BoK official told The News Asia that the adoption of Bank Sign would bring about many benefits for the economy.

“I expect that through cooperation, we will be able to realize cost reduction, service improvements, and discovery of new businesses.” the official said.

South Korea is an active proponent of cryptocurrencies and its related technologies. In recent news, the government has considered a free trade zone run entirely on blockchain and is working on the development of a blockchain registry for diabetes in the country.

The country is also discussing the possibility of implementing a 20% crypto tax.