Cryptocurrency Ripple is receiving spotlight as South Korean Government plans to improve its foreign exchange system. Level of interests towards Ripple is growing bigger as it allows simple and fast foreign wire transfer without having to go through financial network of banks.
According to financial industries, non-banking financial institutions with large stock firms at the center are busy with securing payment systems as new foreign wire transfer services are expected to start soon. Last month, South Korean Government announced its plan to improve foreign exchange system and supervisory system and allowed non-banking financial institutions such as stock firms and credit card companies to carry out foreign wire transfer involving small amount of money.
As a result, each stock firm is looking for ways to provide simple and cost-effective services through its partnership with FinTech companies that deal with foreign wire transfer. Stock firms are focusing on blockchain-based foreign wire transfer platforms that have yet to be invigorated since they are entering foreign wire transfer markets as newcomers.
Cryptocurrency Ripple is the main target of stock firms. Ripple recently introduced an international wire transfer platform called ‘xRapid’ and announced that it would be starting this platform through 3 payment service providers. Coinone, a South Korean cryptocurrency exchange, established a subsidiary called ‘Coinone Transfer’ and introduced Ripple’s xCurrent solution.
“Although there was a possibility of foreign wire transfer through blockchain technology earlier this year, it was difficult to apply blockchain technology to wire transfer due to Kimchi Premium of South Korean cryptocurrency markets.” said a representative for a stock firm. “However, there is now a possibility again as Kimchi Premium is starting to disappear leading to stable cryptocurrency markets.”
Blockchain-based foreign wire transfer is receiving spotlight as it does not require separate partnership with banks. Stock firms mostly use foreign wire transfer for purchasing foreign stocks and exchanging stand-by funds to purchase stocks.
“We are looking into various ways including Ripple as there has been a surge of demands for foreign stocks.” said a representative for a large stock firm. “However, there is somewhat concern regarding blockchain-based foreign wire transfer as South Korean Government has not made a clear stance against blockchain technology.”
Ministry of Economy and Finance regulated Bitcoin-based foreign wire transfer service as illegal last year. Although it announced that it would try to secure transparency of foreign wire transfers involving cryptocurrencies, FinTech industry believes that South Korean Government is practically prohibiting cryptocurrency-based foreign wire transfer services.
Staff Reporter Ryu, Geunil | ryuryu@etnews.com