Korea’s top financial watchdog is moving to create a legal framework to support decentralized identification (DID) and biometric identification services.
According to the Korean-language news site PAXNet News, the FInancial Services Commission (FSC) announced on Dec. 4 a strategy to “scale up” fintech services to accelerate financial innovation.
As part of the strategy, the FSC will promote the use of the My Payment app and create a legal system for the use of new identification technologies such as DID and biometric identification.
A government official said the strategy focuses on support, adding that as fintech is exposed to cybersecurity risks, authorities are looking for ways to minimize that risk while activating the new technologies.
DID allows individuals direct control over their identification and information data. It requires companies to use blockchain technology to decentralize and maintain verification data in order to prevent forgery or alteration of ID or certification information. After a real name has been confirmed, the user’s unique information is stored on the blockchain.
Individuals can store their original ID information – including their name, date of birth, address, and public certificates – on their smartphone to use when needed.
Since individuals can use DIDs – or biometric IDs, for that matter – in multiple places, the technology should make it easier to use financial services and promote the expansion of non-face-to-face services by simplifying procedures and reducing costs.
Currently, there are three major initiatives to commercialize DID in Korea, including of course the MyID Alliance led by ICONLOOP and several banks and securities firms.
An FSC official said though a legal basis for DID already exists using regulatory exemptions for blockchain-based IDs, the government would identify risks to financial security and complete the groundwork to bring DID into the institutional fold within the first half of next year.
As part of this, the government will consider plans to support the activation of the technology.
To complete the groundwork, the FSC plans to put together a task force composed of blockchain and finance experts and begin research to carry out feasibility studies.
The official said the research would consider the unique characteristics of other industries and financial sectors, adding that even after new ID technologies such as DID come into use, authorities would continue improving the system by amending and supplementing laws and ordinances pertaining to digital financial transactions to ensure financial stability.
By securing including into the FSC’s Innovative Financial Services and Regulations Sandbox earlier this year, ICONLOOP’s “my-ID” solution may have served as a catalyst for a government move that could mark the start of blockchain’s mass adoption.
“The FSC’s DID legislation is an example of how blockchain technology can act as a change agent to break from legacy systems,” says ICONLOOP Communication Team Lead Minhwan Kim. “As ID is the basis of the digital economy, if the public van verify the value of blockchain technology through DID, it could promote the mass adoption of the technology in all fields.”