Viva Republica, operator of South Korea-based mobile money transfer app Toss, has reportedly signed a memorandum of understanding with blockchain-enabled firm Optimism to test Korea’s won-based stablecoin infrastructure for institutional payments.

The companies, together with privacy solutions provider Sunnyside Labs, will conduct a three-month proof of concept (PoC) using Optimism’s OP Stack protocol and Sunnyside’s Privacy Boost protocol to develop a Korean won-based stablecoin and assess whether the technologies can be applied to a national blockchain-based payment infrastructure for financial institutions. reported Yonhap News on Wednesday.

The PoC will examine whether financial institutions can control the settlement process, the feasibility of implementing know-your-customer (KYC) and anti-money laundering (AML)-based verification requirements, and whether transactions can remain private on a public blockchain ledger.

The report says Toss plans to employ the three-month PoC as a foundation to build a regulatory-compliant stablecoin-based payment infrastructure in the country.

Cointelegraph reached out to Toss for more details about the stablecoin pilot program.

Upload the application’s home page. Source: Toss.im

Optimism will provide the blockchain infrastructure, while Sunnyside Labs will provide privacy-preserving technology to protect transfers. Sunnyside is the lead developer of Optimism Collective and is building the core OP Stack infrastructure.

Seoul-based Toss launched in 2015 and claims to have more than 30 million users of its mobile app.

Related: Kiwoom Looks at Bithumb Shares as Korean Brokerages Move into Cryptocurrencies: Report

Payments giants are testing stablecoins to improve settlements

Toss’ PoC follows similar stablecoin initiatives undertaken by other major financial institutions in the country.

In delayed April, one of South Korea’s largest credit card providers, Shinhan Card, partnered with the Solana Foundation to test the commercial feasibility of stablecoin payments and the employ of non-custodial wallets after completing a joint pilot project earlier this month.

Shinhan Card expressed hope to eventually develop its own DeFi-connected services that implement blockchain oracles, a technology used to connect information in offchain and onchain environments.

Slow last year, so did payments giant Visa fired USD Coin (USDC) settlement services for some US financial institutions on the Solana blockchain in one of the more advanced examples of stablecoin projects.

Other huge payment providers seeking stablecoins to streamline payments and settlements include: MasterCard and the South Korean BC card.

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