- Given the growing demand for digital asset custody in South Korea, a leading bank has decided to foray into the cryptocurrency industry.
- Domestic firms are not allowed to store their crypto assets at exchanges and are left with the option of self-custody.
- This comes at a time when Korean companies are increasingly holding digital currencies for a variety of purposes.
One of the largest banks in South Korea, Woori Financial Group, has ventured into the cryptocurrency industry.
Demand for crypto custody surges in South Korea
Woori Financial Group is one of the latest South Korean banks to provide services relating to digital assets. The bank is setting up a cryptocurrency custody joint venture with Bitcoin and blockchain services firm Coinplug Inc.
Through the joint venture, the fintech firm will be the largest shareholder, while Woori Bank will be the second-largest shareholder, according to a local report. The joint venture, named D-Custody, is expected to be incorporated next week at the earliest.
The current laws in the country do not allow for banks to directly deal with cryptocurrencies. Therefore, South Korean banks will need to choose to set up joint ventures with partial ownership if they decide to enter into the industry.
Banking experts in the country have said that services related to cryptocurrencies offer a low-risk business opportunity that could act as an additional revenue stream for the banks.
Woori Bank was initially founded in the 19th century and adopted its current name in 2002. It is one of the four largest domestic banks in South Korea and is headquartered in Seoul.
Domestic firms are prohibited from holding their digital assets on exchanges. Therefore many firms are left with the option of self-custody – which poses a high risk of theft or loss.
As a result, demand for cryptocurrency custody services has been growing in the country, as Korean companies have been starting to hold various digital assets for investment purposes and business diversification.
The bank joins other Korean banks, including KB Financial Group and Shinhan Financial Group, in offering crypto-asset custody.
Despite the move for cryptocurrency adoption in the country, South Korean banks, including Woori Bank, KB Financial Group and Hana Bank, stated that they have decided not to deal with domestic digital asset exchanges.
The group stated that the risks and current regulatory environment led to the decision. The banks added that cryptocurrencies continue to pose a risk of being involved in illicit activities, including money laundering.