K Bank is joining hands with local companies in the United Arab Emirates (UAE) to pursue innovation in digital asset-based cross-border remittances and payments between South Korea and the UAE.

K Bank said on Jan. 15 it signed a memorandum of understanding (MOU) with UAE digital asset specialist Changer.ae limited and South Korean blockchain company BPMG to build a South Korea-UAE global remittance infrastructure using digital assets and stablecoins.

The agreement aims to jointly develop a next-generation remittance and payment network linking South Korea with the UAE, a financial hub in the Middle East, based on digital assets. It also aims to identify new business models using blockchain technology.

Under the agreement, K Bank, Changer and BPMG agreed to jointly pursue building a digital asset-based cross-border remittance and payment infrastructure. They also agreed to cooperate on technologies and services related to digital asset custody, conversion and settlement, and to develop new business models using digital assets.

As a top priority, the partners will begin a proof of concept for stablecoin-based transfers between the won (KRW) and the dirham (AED). If a South Korean customer sends won funds through a K Bank account, the funds are converted into stablecoins and immediately transferred to the UAE using blockchain technology, before being settled locally in dirhams.

K Bank will handle won settlement infrastructure, including won deposit and withdrawal accounts and compliance with domestic anti-money laundering (AML) regulatory guidelines. Changer will be responsible for digital asset custody, exchanging between fiat currency and digital assets, and local settlement in dirhams. BPMG will work with K Bank to develop a won-based stablecoin remittance and exchange infrastructure. The three companies plan to build a remittance infrastructure that improves speed and efficiency compared with existing international remittance networks such as SWIFT.

The proof of concept will focus on creating a compliance-focused model that satisfies both South Korea's Act on Reporting and Using Specified Financial Transaction Information and the UAE's digital asset regulations, beyond a simple technology test. The three companies plan to jointly establish standards for linking travel rule solutions, know-your-customer (KYC) requirements and fraud detection systems (FDS).

The main targets of the project are high-net-worth individuals and digital asset investors travelling between South Korea and the UAE, as well as trading companies between the two countries. The task is to address time and financial inconveniences that existing financial networks have not resolved in areas such as real estate investment, startup fundraising and settlement of import and export payments.

Choi Woo-hyung, CEO of K Bank, said cooperation with Changer would be an important foothold for K Bank to enter global markets, particularly Middle Eastern financial markets with abundant liquidity. He said the bank would present a standard for safe and efficient digital asset-based global remittances by combining the reliability of banking with the innovation of blockchain.