Both fintech startups and big financial firms have applied for the Financial Services Commission’s advance enrollment of the “regulatory sandbox” scheme, which has been going on ahead of the enforcement of the Special Act to Foster Financial Innovation in April. As Korea’s financial authorities vowed to spur the early release of innovative financial services, it is quite interesting to see if blockchain projects could be chosen for the regulatory sandbox.
According to the financial industry Tuesday, NH Bank filed applications with the sandbox scheme to develop a service that would use blockchain to enhance the security of customer information. This is intended to apply blockchain to solving the problem of destroying customer information when financial services are used.
“We filed three applications with the FSC and one of them is to use blockchain,” said an NH Bank official, expressing hope that the blockchain-powered service will improve the efficiency in dealing with customer information that needs several procedures including privacy.
Shinhan Financial Group also applied for the sandbox scheme with blockchain services. A group official said, “One of our group affiliates filed an application with blockchain services. Our Strategic Digital Bureau is focusing on such cutting-edge technologies as blockchain, bid data and artificial engineering.” However, it was not revealed what Shinhan’s blockchain services would be.
Fintech firms jumped on the sandbox bandwagon too. Fintech startup Directional knocked on the door of the FSC’s sandbox scheme to find a way out of services related to the Capital Market Act. Directional will use a technology to manage blockchain ledgers to support its service.
According to the FSC and the Financial Supervisory Service, 15 financial companies and 73 fintech startups applied for the advance enrollment of the regulatory sandbox made Jan. 21-31. The 88 companies filed applications for 105 services that include blockchain, insurance sales, peer-to-peer loans and big data.
An FSC official declined to confirm the detailed list of companies, only stating that three blockchain services have been confirmed but more blockchain-related services could come out.
A growing number of companies have shown keen interests in the regulatory sandbox scheme in their efforts to strengthen digital capabilities, capitalizing on its strength that they can be exempt from various regulations. That’s because they can get privileges if there is no relevant law or it’s inappropriate to apply related clauses to innovative financial services.
Blockchain experts say it’s noteworthy that blockchain technology has been filed as an item for the sandbox scheme. But a blockchain company official expressed skepticism about blockchain being chosen, saying, “Financial firms appear to have included blockchain to emphasize innovation.”
“We are providing blockchain-based services but given the host of exemptions from regulations under the sandbox system, it would be advantageous to foster general services. Anyway, it’s good to see blockchain stand out in the sandbox,” another startup official said. /firstname.lastname@example.org
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