A major Korean commercial bank is entering the cryptocurrency business by allocating an equity investment in Korea Digital Asset Trust (KDAC). Shinhan Bank is seeking to provide digital asset custody services.
Banks expect to provide technical capabilities to deal with hacking risks associated with defi
According to inews24, the bank announced its investment in KDAC, a joint venture custody company co-founded by local cryptocurrency exchange, Korbit, blockchain company Blocko, and cryptocurrency researcher Fair Square Lab.
A spokesperson for Shinhan Bank stated that their upcoming encryption-related services are suitable for areas that “can make full use of the bank’s compliance capabilities and custody experience.”
But the bank claims to be one step ahead in the safety of customer funds. In fact, they emphasized that this move will allow the deployment of technical functions to protect “from external and corruption risks.”
Shinhan Bank also hopes to apply the technical resources used in the project to the field of decentralized finance (Defi), which will become an active target due to hacking incidents in 2020. Zhao Yongping, Chairman of Shinhan Financial Group, commented on this investment:
As all companies are active in digitalization regardless of their business, Shinhan’s fate will also depend on digital transformation. Based on the drive system, all Shinhan people should wholeheartedly accelerate digital innovation.
Other major banks in South Korea conduct crypto-related business operations
One of the bank’s competitors, Kookmin, announced in November 2020 that they will jointly create a “digital asset management company” with local blockchain participants. The bank aims to provide crypto custody services to corporate clients, such as exchanges.
According to the announcement, the KMT invested in KDAC, blockchain accelerator Hashed, and blockchain developer Haechi Labs with an undisclosed amount.
However, Kookmin Bank and Shinhan Bank are not the only ones involved in the cryptocurrency custody business. 2020 is a year when traditional Korean banks have invested heavily in the cryptocurrency industry.
In July 2020, NH Bank announced its plan to establish a crypto custody service platform for institutional investors. The bank also hinted that it may provide the Bank of Korea (BOK) with custody services for the upcoming Central Bank Digital Currency (CBDC).
What do you think of the latest trends in the Korean banking industry in the cryptocurrency industry? Let us know in the comments section below.
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