South Korea’s fourth largest bank, Woori Bank, will set up a joint venture to provide custody services for cryptocurrencies.
Thus, Woori Bank followed the example of competitors. KB Kookmin, Shinhan Bank and Nonghyup Bank, which had previously implemented similar initiatives.
The impetus for this was the legalization of cryptocurrency trading by the local parliament. As well as the tightening of control over compliance with measures to combat money laundering by the Financial Services Commission. Recall that in the first quarter of 2021, South Korean banks processed ~ $ 57.9 billion of transactions on verified accounts associated with cryptocurrency platforms. The value has exceeded the cumulative figure for 2020.
Woori and Coinplug partnership
Woori Financial Group, South Korea’s fourth-largest lender by total assets, has joined a growing list of institutions that have ventured into crypto custody.
According to a report from Woori Financial Group, a major banking group has partnered with local blockchain development company Coinplug to create a joint venture called D-Custody. A joint venture could be set up as early as this month.
Moving to crypto storage, Woori Bank wants to capitalize on the growing demand for crypto storage solutions among large South Korean companies that have access to a growing asset class.
Thus, the growth of the number of Korean companies investing in cryptoassets for the purpose of investment and diversification, warms up the demand for services to preserve digital assets. Companies and organizations want their cryptocurrencies to be held responsibly.
The presenter of the bank sector announced that he was expecting the growth of the digital currency storage market. As on the background of the global cryptocurrency boom, more banks should enter this sphere.
However, according to the current legislation of South Korea, local banks prohibited from directly dealing with the storage of cryptoassets. Therefore, in order to “gain a foothold” in the cryptocurrency industry, more and more local financial institutions open joint ventures with partial ownership.
Legalization of cryptocurrency and its storage in Korea
Last year, the country’s government legalized cryptocurrency and its storage. After that, parliament passed a number of amendments that led to the restructuring of the country’s blockchain industry. Crypto funds and crypto wallets are now required to provide financial statements. They must only use bank accounts with real names. The strict regulatory climate hasn’t dampened the enthusiasm of crypto professionals. Exchange investors report an increase in activity in the field of digital currencies.
The amendments affected crypto exchanges, funds and crypto wallets, companies conducting ICOs, and other market participants. It was after the rapid development of the joint business of cryptography and banks took place in South Korea.
Korea Digital Asset COO Cho Jin-seok argues that crypto storage is more predictable than trading. Which is why domestic banks are expanding and doing business.
While its maritime neighbor, Japan, allows banks to offer crypto storage directly to their customers, South Korea requires a joint venture, which complicates the process.
Woori Financial Group had to go the same way to enter the crypto deposit market.
Several large European and American banks such as Deutsche Bank, New York Mellon and Standard Chartered have already taken the aforementioned market niche.