Woori Financial Group, one of the biggest financial conglomerates in South Korea, will offer crypto custody services. The bank will develop a joint venture effort with Coinplug, a blockchain-based developing company. This conglomerate signals the third bank entering the market in the country, after KB Kookmin Bank and Shinhan Bank.
Woori Financial to Develop Joint Venture to Offer Custody Services
Woori Financial Group, one of the biggest banks in South Korea, will soon offer cryptocurrency custody services. According to reports from Korea Economic Daily, Woori will establish a joint venture with Coinplug, a blockchain solutions developing company with more than 300 blockchain patents.
While South Koreans have traditionally been attracted to cryptocurrency, their regulatory framework forbids them from relying on exchanges for custody. This has spurred interest from banks in stepping up and including cryptocurrency custody in their services. However, from a legal standpoint, banks cannot offer these services independently and need to enter the market via joint ventures.
Still, banks are well-positioned to be the main providers of crypto custody in the country. Banking institutions are generally well trusted in the country, and crypto is an incumbent industry. A Woori official stated:
In overseas markets, the digital asset custody has become a successful, established practice among the new services offered by the banks.
Banks Offer Crypto Custody as New Revenue Source
With Woori’s move, all three main banks in the country are now offering crypto custody services. The biggest bank conglomerate in the country, KB Kookmin Bank, was the first to enter the space. It established a joint venture in November 2020, Korea Digital Asset Co. (KODA), with other blockchain-related companies.
The second Korean bank to dip its feet into the new field was Shinhan Bank. Shinhan Bank inked a joint venture this year with Korbit to establish their own custody service, called Korea Digital Asset Custody Co. Custody is more akin to the traditional services banks offer for fiat currencies, and some think this is why banks are incorporating this activity as another relatively stable source of revenue.
South Korean regulators have taken a hard stance on crypto, proposing new regulations that could severely affect cryptocurrency exchanges in the country. They also banned police officers from buying cryptocurrency in May.
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