South Korean banks are betting on the crypto market by entering the digital asset custody services market.
Woori Financial Group has become the country’s third major banking group to enter the digital asset custody services market, following the lead of KB Financial Group and Shinhan Financial Group, The Korea Economic Daily reports.
The financial group’s banking unit, Woori Bank, has reportedly agreed to set up a digital asset custody joint venture named D-Custody with Korean blockchain developing company Coinplug Inc. The joint venture is anticipated to be incorporated as early as next week.
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Although banks are highly reliable financial custodians, current laws prohibit them from directly entering the digital asset custody services market, so these institutions set up digital asset custody services joint ventures with partial ownership.
Crypto boom fuels demand for digital asset custody services
The increasing number of Korean firms that invest in crypto assets for investment and diversification fuel demand for digital asset custody services. Companies and organizations want the safekeeping of their cryptocurrencies.
A bank industry official earlier anticipated the growth of the digital currency custody market, saying that more banks will likely jump into it amid the global cryptocurrency boom.
“Demand for safer custody of customers’ digital assets will grow bigger down the road. Banks also need to keep a close eye on other cryptocurrency-linked business areas, even if they cannot engage in them directly due to watchdogs’ negative sentiments toward cryptocurrency investment,” the official said, according to The Korea Times.
Banks jumping into digital asset custody services
In November, the nation’s largest bank, KB Kookmin Bank, entered the digital asset custody services market by establishing Korea Digital Asset Co. (KODA) through a partnership with blockchain-oriented venture fund Hashed and blockchain firm Haechi Labs.
Shinhan Bank also ventured into the market earlier this year by investing in Korea Digital Asset Custody Co. (KDAC), founded by crypto exchange Korbit. On July 8, NH Bank also announced plans to launch its crypto asset businesses together with Korea Information and Communications Co. and blockchain startup Hexlant Inc.
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