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Top Banks in South Korea Select CenterPrime And Chainlink To Bring FX Rates Data to DeFi

In South Korea, leading commercial banks have selected local fintech platform CenterPrime and Oracle system Chainlink to bring foreign exchange rate data feeds from local banks to the decentralized finance (DeFi) space. CenterPrime has access to the Korean open banking API that streams foreign exchange data from several local banks in the country.

Developing Country’s Perspective

Such integration would see CenterPrime share foreign exchange rates from leading Korean banks, including the Industrial Bank of Korea (IBK), Ngonghyup Bank, Shinhan Bank, and Hana Bank to Chainlink’s decentralized oracle network.

Access to foreign exchange rates would be enabled in Korea’s local currency Korean Won. The price feeds would include Korea Won (KRW), China Yuan (CNY), Euro exchange rate (EUR), US dollar (USD), and many more.

The data would be accessible for DeFi service providers operating in the network, thus allowing them to access decentralized exchange rate data when creating smart contracts on blockchain platforms.

The development would bring more Korean users to DeFi while DeFi service providers would be leveraged as their exchange rates are provided by top commercial banks.

The development opens floodgates for a tremendous expansion in blockchain-based fintech applications operating DeFi and cross-border applications that build unique home-group products priced in the local currency Korean Wons. The development also transforms the capabilities of fintech and open banking services, therefore, bringing breakthrough innovations for the fintech industry in the country.

This is the first time in history that has happened in which blockchain apps would have the capability of accessing decentralized foreign exchange rates compiled by leading banks in South Korea.

Saving Traditional Finance with DeFi

DeFi has created a new wave of innovation that is shaping traditional finance. Just like Bitcoin is a peer-to-peer-cash, the DeFi system is a peer-to-peer service that functions without the need for intermediaries. With such a peer-to-peer electronic financial instrument system, projects are using blockchain and cryptographic tokens to enable anyone to own, transfer, and issue financial instruments.

South Korea is one of the most advanced and largest economies in the world. The country has one of the highest rates of cryptocurrency adoption in the globe. Having access to the decentralized data from the traditional financial markets makes the country set to expand the base of the DeFi use case.

HSBC and Wells Fargo Utilize Blockchain Technology, Enhancing Foreign Exchange Transactions

HSBC and Wells Fargo have signed a strategic agreement to use a settlement ledger powered by blockchain technology when undertaking foreign exchange (FX) transactions. This move is deemed a stepping stone towards minimizing settlement risk.

In a statement, Mark Jones, co-head of Macro, Wells Fargo Corporate & Investment Bank, welcomed this move and said:

“We are extremely excited to be collaborating with HSBC on a project which places both organizations at the forefront of blockchain innovation. We believe this will be the first step of many utilizing transformative technology across our industry in the years ahead.”

Using blockchain technology, two banks will enjoy efficient Payment-vs-Payment (PVP) settlement netting. Furthermore, real-time transparency will be availed in the FX transactions.

The blockchain-based settlement ledger is also expected to reduce associated settlement costs in the $6.6 trillion-a-day foreign exchange market.

The agreement also means that the two leading financial companies will bypass the nearly two-decades-old Continuous Linked Settlement (CLS) system used for FX transitions.

The ledger will be used to process the US dollar, Canadian dollar, Euro, and British pound sterling transactions with plans to extend to other currencies soon.

Mark Williamson, the global head of FX partnerships & propositions at HSBC, noted that this was a step forward towards more financial innovations.

“As financial services continue to digitize the store of payment and value on blockchain, we are delighted to work with Wells Fargo in the adoption of this important cross-border digital backbone for the confirmation and settlement of Foreign Exchange trades.”

Meanwhile, the central banks of France and Switzerland, together with the Bank of International Settlements (BIS), successfully conducted a wholesale Central Bank Digital Currency (CBDC) trial involving the nations’ fiat notes.

BitMEX Seeks to Connect Forex Market and Crypto Innovation through FX Perps

Crypto exchange BitMEX has launched the first-ever FX perpetual swap contracts (FX perps) that will enable users to trade the most sought-after foreign currency pairs 24/7, irrespective of whether the forex market (FX) is closed or not.

Therefore, this move by BitMEX will prompt crypto’s first-ever perpetual FX swap listing. Daniel Egloff, the Head of Quants at BitMEX, pointed out:

“BitMEX FX perps are a transparent exchange-traded contract which allows FX traders to go long and short as a taker or maker for which we offer a 1 basis point fee rebate, which is unique in the industry. For institutional users, FX perps provide an entirely new way to create synthetic crypto pairs to arbitrage – for example; Bitcoin quoted in non-USD currencies.”

The innovation rendered by the FX perpetual swap is that it’s a form of derivative contract that incorporates the merits of both the future and spot markets. As a result, institutions and individuals can trade it with up to 50x leverage.

Per the announcement:

“One of the key innovations is a funding rate that is paid every eight hours to help trading prices stay in line with the underlying index price. The FX perpetual swap allows users to long or short FX pairs – e.g., EURUSD and NZDUSD – in order to capitalise on price differences in foreign currency markets.”

“FX perpetual contracts on BitMEX are margined and settled in either Bitcoin or Tether (ERC-20),” the report added.

Therefore, the FX perps are advantageous to traders who intend to leverage the benefits of derivatives without worrying about expiry dates.

Alexander Hoptner, the BitMEX CEO, noted:

“The launch of our FX perpetual swap marks another step in our journey to create a vibrant crypto ecosystem for our customers.”

Meanwhile, BitMEX reached a milestone by hitting a daily trade volume of $24 million in less than ten days after being launched in May.

The significant 24-hour trade volume illustrated a strong desire by institutional and retail investors to enter the crypto space, Blockchain.News reported.