South Korean Banks hold Billion Dollars Worth of Cryptocurrency
South Korea has been in the news recently because of some of its crypto regulations. The latest from the country, according to a report from the country’s central bank, is that the banks held almost $2 billion of cryptocurrency in December 2017. This is why the South Korean banks appear bullish on cryptocurrencies.
The net amount was down played in the bank’s official comment: “The amount of crypto-asset investment is not really big, compared with other equity markets, and local financial institutions’ exposure to possible risks of digital assets is insignificant. Against this backdrop, we expect crypto-assets to have a limited impact on the South Korean financial market.”
As mentioned before, previously the country was in news for accepting the blockchain industry as a legitimate business for the first time. Laws have been passed to that end classifying different types of blockchain businesses. The businesses are expected to work with the state for the very first time.
The situation now is that banks have decided to participate in the market. Whatever funds they have in virtual currencies, they plan to invest it but are careful too about not hurting Asia’s Economy by possessing large numbers. Regulated banks are currently the largest stakeholders in South Korea.
Financial institutions in the country are going beyond cryptocurrencies and investing in products and services for other companies, individuals and interested parties. Korea’s second largest bank, Shinhan, has developed a Bitcoin vault for customers. Whereas they have also partnered with one of the most important networks in the market, Ripple, to use blockchain technology to advance its services.
Shinhan explained in a press release:
“[We are] testing a virtual bitcoin vault platform wherein the private keys of bitcoin addresses and wallets are managed and issued by the bank. The bank intends to provide the vault service for free and charge a fee for withdrawals.”
The country’s biggest cryptocurrency exchange, Bithumb, has reported massive growth in profits, clearly indicating the popularity of crypto in the country. Despite the government’s numerous attempts to thwart the sector, they could not deter the public and innumerous examples of illegal behaviour convinced the government that there was a need to regulate the industry by law.
This is a profitable business for South Korean banks, because according to Forbes, they made approximately $2 million profit from cryptocurrency trade commissions last year alone.