South Korea’s digital asset giants Hana Financial Group, POSCO International, and Dunamu signed a trilateral memorandum of understanding (MoU) on Wednesday to launch a blockchain-based cross-border remittance system.
The move comes as the nation pushes towards practical blockchain adoption growth amid support from financial and industrial sectors.
The terms of the deal will see POSCO International serve as the first real-world use case of the cross-border remittance system, marking a first of its kind service.
The deal comes on the back of South Korea witnessing a rapid blockchain growth. Market reports suggest that the nation’s blockchain business is booming, thanks to widespread government backing. Blockchain usage is rapidly increasing in financial services (BFSI), with a projected CAGR of over 39 percent by 2034 due to improvements in payments, custody, and trading infrastructure.
Trilateral agreement comes after a previous successful POC
The agreement was signed at Hana Financial Group’s headquarters in Seoul, building on earlier work between Hana and Dunamu, the operator of crypto exchange Upbit.
The MOU comes as an aftermath of a previous proof-of-concept (POC) which was completed earlier this year by Hana and Dunamu and showed that blockchain infrastructure could meaningfully cut down both settlement time and transaction costs when compared with the traditional SWIFT-based system.
In that pilot phase, Dunamu’s proprietary GIWA Chain was used to replace SWIFT’s messaging layer, effectively allowing cross-border transfers to be processed in a more direct and streamlined way.
The process has now moved beyond the mere testing of the technology to its actual application in operations. This system will be applied in real-life transactions where POSCO International will make transactions through money transfers in relation to their businesses.
This process represents a significant change from just testing the technology to actual financial transactions using the technology, which has usually been considered the most challenging part of the adoption of blockchain technology.
Traditional SWIFT technology takes place in two phases for cross-border payments; the first involves making instructions for payments, while the second involves transferring the funds through banks.
The separation results in delay, increased costs, use of several correspondent banks, as well as potential for errors. Blockchain technology attempts to address this problem by merging message and settlement services to provide a transaction that is both initiated and settled in real time.
Terms of the agreement
Under the structure of the agreement, each party has a clearly defined role. POSCO International will apply the system directly to trade transactions through its commercial operations.
On the other hand, Hana Financial Group will handle remittance processing, foreign exchange management, and settlement responsibilities. Meanwhile, Dunamu will provide the blockchain infrastructure through GIWA Chain and maintain the distributed ledger that records all transaction activity in real time.
According to POSCO International President Lee Gye-in, the collaboration helps build a foundation for long-term partnerships in digital finance and digital asset innovation between major domestic companies.
The three companies are now working towards developing a fully functional model for real-time blockchain remittances by the end of the year, which could eventually be expanded into broader trade finance and cross-border settlement use cases if successful.
The move is also in line with the increasing interest by POSCO International in blockchain for its financial infrastructure needs. Recently, it issued digital bonds based on blockchain technology for foreign currencies to the tune of 140 billion won (approximately $95 million), in collaboration with HSBC.
Previously, POSCO had partnered with JPMorgan on building a global payments platform based on blockchain technology, indicating a continuing interest in making blockchain technology mainstream in financial settlement operations. If this implementation turns out to be successful in a live environment, South Korea can emerge as one of the frontrunners in this field.