As the tally now stands at four, blockchain experts wonder if the financial sectors’ crypto adoption is “too little and too late”
In a major boost to institutional adoption of cryptocurrency in South Korea, Woori and Shinhan banks of the country have announced they will be providing crypto-asset services.
This means that four of South Korea’s top five banks — Woori, Shinhan, Kookmin, and Nonghyup are now directly involved in the crypto space. With a combined $1.2 trillion of assets under their management, the four banks will hold and manage cryptocurrency for their customers.
The banks have cited diversification and growing consumer demand as the two major reasons for their increased interest in the crypto space. Shinhan and Woori banks announced their intentions to introduce crypto services as a direct response to the amended Special Financial Transactions Information Act.
The Act, coming into force next year, is expected to change legislation around crypto-assets. Further legislations involving taxation of cryptocurrency, reporting all transactions and allowing only licensed entities to operate and provide crypto services for clients are all on the list of proposed laws for the next year.
This is Shinhan bank’s second attempt at entering the crypto space as their previous plans for crypto storage in 2017 were thwarted by the government in January 2018.
NH Nonghyup and Kookmin Banks are already in an advanced stage of the process of implementing crypto custodial services. Blockchain teams have been coordinated to plan the custodial offering with the former even hoping to roll out specialised features to attract “institutional investors” in the coming months.
However, blockchain experts in South Korea have expressed their concerns over these steps calling them “too little and too late”. Citing US institutions that are currently well ahead of South Korea’s banking sector with regards to the crypto space, the head of the Blockchain Research Center at Dongguk University, Park Sung-Joon, explained he was worried about the nation’s financial competitiveness.
“Other countries are moving very quickly in this regard. But there is still no legal system in place in South Korea, so progress is slower than expected,” he stated. Without institutional backing, this push for cryptocurrency by South Korean banks might not lead to widespread adoption, he added.
Although the financial sector has lagged behind many other countries in adapting to the crypto space, the South Korean Government is big on cryptocurrency and blockchain technology. It recently earmarked $400 million for researching and developing a distributed ledger system to help the country break the economic shackles posed by the pandemic.
Written by Harshini Nag