SOUTH KOREAN BANKS TO ENTER CRYPTO!
South Korea’s stance:
Woori Financial group, a South Korean bank has entered the crypto world. It recently announced its joint venture with CoinPlug to offer crypto custody services to its clients. The Woori Financial group is the third major bank in South Korea to offer such service. The first two banks were KB Kookmin bank and Shinhan Bank.
The Woori Financial Group is a Seoul-based financial service firm and the fourth largest bank in South Korea. The bank was formed in 2001 with the merger of various small banks and an investment bank. The South Korean government remains a significant investor in the company. This can imply that even the South Korean government has no objections against cryptocurrency. The Woori group has three businesses which include banking, securities and investment research. It aims to be a market leader in the crypto custodial service soon.
The company has partnered up with Coinplug. Coinplug is a leading Korean blockchain developer founded in 2013. The firm is said to have over 300 patented blockchains under the company’s name. The company has secured its future by entering into a joint venture with the fourth largest bank in South Korea.
About Crypto Custody:
Cryptocurrency custodial services refer to the service provided by a third party. The digital assets owned by the users are stored by the third party in either hard wallets or cold wallets.
These custodians offer security for the assets of their clients and offer storage at minimal costs. The users can withdraw their stored assets within one business day.
The Joint Venture:
South Korea’s laws and regulations prohibit exchanges to offer custodial services for cryptocurrencies. This has encouraged several banks to capitalize and exploit the demand in the market. The Woori financial group has set up custodial services in partnership with CoinPlug. It did so because the Korean laws also prohibit banks from offering crypto services on their own. Keeping the interest of the citizens in mind, the Korean regulators announced that banks must enter into a joint venture with another company, preferably a company associated with cryptocurrencies in order to launch custodial services or any other related service.
Benefits to South Korean Citizens:
The South Korean citizens can store their digital assets with extra security. Crypto custody is the safest way to hold digital assets for a longer period of time. To add to the convenience, the users can also withdraw their stored assets within a business day. In case of a public holiday, the withdrawal may take up to 48 hours.
Moreover, the digital assets are majorly stored in cold storage wallets. Cold storage wallets are offline storage facilities. Owing to the offline nature of such wallets, the security of the assets is enhanced. Cold wallets prevent hackers or third parties from accessing the network and steal the assets or other information.
Cold wallets also help in preventing cyber-attacks, hacking, theft or other threats to sensitive information or the digital assets themselves.
Moreover, the users have a variety of options to choose from. As mentioned above, the Woori Group is not the only bank to enter crypto custody service. Two other banks are already in this market providing this service. People can choose their preferred bank out of the three according to their confort, convenience and trust. Since people have been accustomed to banks for their financial needs, they can now also approach banks regarding cryptocurrencies.
Benefits to the Companies:
There is a vast upside to the companies who have entered the joint venture. Since only two other banks are present in this market, the competition is relatively less. The Woori Group can compete with the other banks by levying lower fees, offering instant withdrawal services and other benefits to the users in order to gain market share. The Bank has also cultivated another revenue stream by entering into the crypto custodial service. Their revenues are likely to increase at substantial rates since cryptocurrencies are very popular in South Korea. The crypto investors are likely to approach the Woori Group to meet their custodial needs.
Moreover, the second company, CoinPlug will also gain goodwill from this project. Entering into a joint venture with a large bank is highly prestigious and will increase its popularity as well as revenue stream. CoinPlug will advance and become a market leader in the crypto realm if this partnership succeeds.
This partnership will prove to be a boon to the citizens as well as both the companies.