To mitigate regulatory risks, major South Korean banks are forming joint ventures with minuscule stakes in order to provide crypto custody, with Woori being the latest.
The group’s banking unit, Woori Financial Group, has become the latest major South Korean financial institution to declare it will introduce digital asset custody services, according to a July 11 storey from The Korean Economic Daily.
The bank is forming a digital asset custody joint venture called D-Custody with Coinplug, a Bitcoin-based fintech service business.
D-largest Custody’s stakeholder will be Coinplug, followed by Woori Bank. The incorporation of the joint venture is planned in the following weeks.
Domestic companies are not permitted to use the services of cryptocurrency exchanges under current Korean law, which means that the country’s banks may only participate in the crypto market through joint ventures or share investments.
While local banks are barred from joining the digital asset custody business directly, a growing number of large Korean financial institutions are forming joint ventures with partial ownership in order to acquire a foothold in the field. According to a Woori Bank official,
“In overseas markets, the digital asset custody has become successful, established practise among the new services offered by the banks.”
Kookmin Bank, Shinhan Bank, NH Nonghyup Bank, and Woori Bank, four of South Korea’s five major banks, had stated their plan to provide crypto custody services as of August 2020.
In March 2020, Kookmin, the country’s largest banking institution, submitted a trademark application for its custody service, before forming Korea Digital Asset Co. in November with the help of venture capital company Hashed and local blockchain service startup Haechi Labs.
Nonghyup Bank and blockchain startup Hexlant formed a blockchain financial services consortium in June 2020. Together with Korea Information & Communications Co., the company announced ambitions to start a custodial business.
Shinhan Bank stated in January 2021 that it has taken a strategic investment in Korea Digital Asset Trust, a crypto custody consortium sponsored by Korbit, a prominent local exchange.
