"Notable crypto move from South Korea-based banks."

14.02.2025 13:12

The banking sector in South Korea is giving the green light to cryptocurrency investments. With the new regulation from the Financial Services Commission, the market opened to institutional investors is expected to generate an economic value of $31.8 billion by 2030. Strategic partnerships between banks and cryptocurrency exchanges are on the rise.

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The banking sector in South Korea is undergoing a historic transformation towards cryptocurrencies. With the new regulation from the Financial Services Commission, doors are opening for companies and non-profit organizations to invest in virtual assets, and the sector is expected to create an economic value of $31.8 billion by 2030. The country's five major cryptocurrency exchanges are leading the expansion of the digital asset ecosystem by forming strategic partnerships with leading banks.

A Revolution in the Crypto Space in South Korea

With the latest regulation from the Financial Services Commission (FSC), the regulatory body for crypto and finance in South Korea, a new era begins for companies to invest in crypto assets. As the banking sector expands its cryptocurrency operations, the Virtual Asset Committee's recent decision allows non-profit institutions such as universities and social welfare organizations to open crypto asset accounts in the second quarter.

According to forecasts from the Korbit Research Center, the entry of institutional funds is expected to create an economic value of approximately $31.8 billion (46 trillion won) by 2030. The banking sector, which previously approached cryptocurrencies with caution, has now begun to turn towards this area.

The country's leading five cryptocurrency exchanges are continuing their efforts in collaboration with different banks. Partnerships such as Upbit-Kbank, Coinone-KakaoBank, Korbit-Shinhan Bank, and GOPAX-Jeonbuk Bank are ongoing, while the collaboration between KB Kookmin Bank and Bithumb is planned to start on March 24.

Sources familiar with the matter emphasized that banks are creating new value areas by going beyond traditional services. Including virtual assets in the regulatory framework reduces risks while opening new revenue streams. For example, Kbank, through its partnership with Upbit, is expected to source 17% of its deposits from this channel in the first half of 2024, while 40% of its fee income comes from money transfers.

Banks like Hana Bank and Woori Bank, which have not yet established exchange partnerships, are also evaluating opportunities in the sector. Hana Bank took a step into digital asset management by purchasing 25% of BitGo Korea in September. Woori Bank, on the other hand, collaborated with BDACS in January for virtual asset custody services.

FSC Vice Chairman Kim So-young stated that allowing companies to open crypto investment accounts would balance monopolization in the market. However, experts emphasize that anti-money laundering systems need to be strengthened before the new regulations are fully implemented. A spokesperson for the Digital Asset eXchange Alliance announced that efforts will continue in collaboration with financial authorities regarding user security and combating money laundering.