A major commercial bank in South Korea is entering the crypto business by allocating an equity investment in the Korea Digital Asset Trust (KDAC). Shinhan Bank is looking to offer digital asset custody services.
Bank expects to offer tech capabilities to face defi-related hacking risks
According to inews24, the bank announced the investment in the KDAC, a joint-venture custody company founded by a local crypto exchange, Korbit, blockchain firm Blocko and crypto researcher Fair Square Lab.
The Shinhan Bank spokesperson stated that their upcoming crypto-related services are suitable for an area that “can make good use of banks’ compliance capabilities and custody experience.”
But the bank claims to be one step ahead in terms of security for customers’ funds. In fact, they stressed that such a move would allow deploying technological capabilities to protect “from external and embezzlement risks.”
Shinhan Bank also wants the tech resources used in the project to be applied in the decentralized finance (Defi) sectors, which were actively targeted over 2020 by hacking incidents. Cho Yong-byeong, chairman of the Shinhan Financial Group, commented on the investment:
In a situation where all companies, regardless of business, are digitally active, the fate of Shinhan will also depend on digital transformation. Based on the driving system, all Shinhan people should accelerate digital innovation with one heart.
Other major South Korean banks making crypto-related business maneuvers
One of the bank’s rivals, Kookmin, announced in November 2020 that they’d create a “digital asset management company” jointly with local blockchain players. The bank aims to offer crypto custody services for corporate customers, such as exchanges.
Per the announcement, Kookmin invested in the KDAC, blockchain accelerator Hashed, and blockchain developer Haechi Labs for an undisclosed amount.
However, Kookmin and Shinhan Bank are not the only ones making a move into the crypto custody business. 2020 was a year characterized by significant investments by traditional South Korean banks in the cryptocurrency industry.
In July 2020, NH Bank unveiled its plans to build a crypto custodial services platform for institutional investors. The bank also hinted at the possibility of offering custodial services to the Bank of Korea (BOK) for its forthcoming central bank digital currency (CBDC).
