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South Korean banks want to expand their crypto deposit offerings – as competition in the industry begins to intensify.
Only a small handful of banks have so far agreed to work with crypto exchanges and offer real-name banking services to their clients, with the majority ruling out the idea of working with trading platforms for now.” But it seems that banks are far more comfortable with the idea of helping exchanges store their customers’ fiat and crypto.
According to Asia Kyungjae, some of South Korea’s biggest banking players have been looking for indirect ways to get into the crypto custody game as existing banking laws prevent mainstream financial institutions from handling cryptoassets. However, banks were able to circumvent this by creating joint venture companies or conducting M & A transactions.
Here’s a breakdown of some of the biggest banks’ recent crypto custody moves.
NongHyup (NH Bank)
Asia Kyungjae noted that NH was “the most active player in the custody business” and has made a “strategic investment” in a custody specialist called Cardo in recent days. The latter is currently preparing to launch a new service and wants to strengthen its credibility by acquiring “the certification of information security management systems” from a government agency. It also has plans to introduce digital custody offerings.
Kookmin (KB Bank)
KB signed a deal with Haechi Labs and Hash last November to co-found the Korea Digital Asset (KODA) joint venture and become the first bank in the digital asset custody services industry. It has gained a number of high-profile clients in the time since its inception, including crypto-keen gaming giant WeMade.
Shinhan has also made “a strategic investment” in the Korea Digital Asset Trust (KDAC), a “Digital Asset Management Company”. It also has some notable clients, such as NXC, the holding company of gaming giant Nexon, which also owns the Bitstamp and Korbit exchanges. Alpha Asset Management is also a client.
Woori has teamed up with fast-growing blockchain and crypto player Coinplug to create a crypto custodian company called Decustody.
The media has also noted that in addition to cryptoassets such as Bitcoin (BTC), banks are looking to expand their custody services to non-fungible tokens (NFTs) and security token offerings (STOs).
An industry insider stated that Crypto Custody does not require money laundering controls from banks, meaning that “from the bank’s perspective,” custody is “less burdensome” than offering banking services for exchange,” adding that custody “could generate new commission revenue” for banks.
The insider added that it “also” offered banks the opportunity to enter a sector they have been looking for some time.
As previously reported, a domestic banking think tank recently recommended that banks actively engage in crypto custody transactions.
Meanwhile, a South Korean university is trying to create a set of legal standards for the crypto sector that could be applied throughout the Northeast Asia region.
NoCut News reported that the efforts will be led by the Northeast Asian Law Research Institute of JeonBuk National University, which will “review national and international trends in cryptocurrency and present standardization standards for various areas of law” – later “and “export law” to the wider Northeast Asian region.