Korea's Oldest Mileage Program May Convert Cash Points to Crypto

The company behind OK Cashbag, the oldest and most popular mileage point program in South Korea, is mulling a plan to convert cash points accumulated by its users into cryptocurrency.

Operated by SK Planet, the e-commerce arm of communication giant SK Telecom, OK Cashbag was launched in 1999 to reward users who purchased goods and services from SK affiliated merchants. In an interview with CoinDesk Korea, SK Planet said a plan to introduce a blockchain system to tokenize cash points had been shared with the company's top-level management.

One aspect of the plan would involve the creation of a so-called stablecoin, or a cryptocurrency that maintains a fixed value, given that the points in question are tied to the Korean won.

While the bid – temporarily called OKX – is subject to further research ahead of any formal debut, it's a notable development given the existing user base of OK Cashbag and the number of merchants that accept the usage of OK Cashbag points.

According to the report, the program now has over 35 million users with more than 50,000 affiliated merchant stores where consumers can spend their rewards. They can also exchange points for cash if they earn more than 50,000 points.

And, while SK Planet could not calculate the exact amount of its reserve, the company told CoinDesk Korea that the total amount of points within its system could be worth more than $100 million.

More broadly, the report also indicated that SK Planet's move may run into regulatory hurdles even if the company decides to roll out the initiative.

According to the report, OK Cashback's cash point system is currently categorized as "prepaid electronic payment means." Firms offering this type of service must obtain approval from South Korea's Financial Services Commission.

Since the South Korea government has yet to pass a legal framework for cryptocurrencies, it remains to be seen whether SK Planet's plan will receive approval under the Electronic Financial Transactions Act mandate, the report said.

Korean won image via Shutterstock