Woori Financial Group in South Korea to provide Digital asset custody

Woori Financial Group in South Korea to provide Digital asset custody

BUSINESS | July 12, 2021 | WOZINGA NEWS

Woori Financial Group in South Korea to provide Digital asset custody

  • Woori Financial Group is joining forces with bitcoin exchange Coinplug to offer the service.
  • Digital asset custody is a service that securely stores and manages digital assets, such as cryptocurrency owned by various entities and organizations.

By Elah Mae Ariate Wozinga Journalist

The Major banking group in South Korea, Woori Financial Group will enter the digital asset custody service (DACS). The group followed KB Financial Group and Shinhan Financial Group.

According to Korea Economic Daily, the financial groups banking unit has agreed to set up a digital asset custody joint venture (JV) with a bitcoin-based fintech solutions provider, Coinplug Inc.

Coinplug will be the largest shareholder of the JV, named D-Custody, while Woori Bank will be the second major shareholder. Based on the report, JV will be incorporated by next week at the earliest.

Digital Asset Custody

Digital asset custody is a service that securely stores and manages digital assets, such as cryptocurrency owned by various entities and organizations. The service’s demand has recently increased. A much larger number of Korean firms beginning to own various types of cryptocurrencies for business diversification or investment purposes.

According to the Korea Digital Asset, Chief Operating Officer, Cho Jin-Seok, β€œThe digital asset custody contracts must abide by the same customer identification. Also, anti-money laundering systems currently run by the banks. Unlike the cryptocurrency trading business that has a high level of uncertainties. The banks understand that the digital asset custody business can be largely under their control and fall under their expertise area.”

Current Regulations in Korea

Korea currently prohibits domestic entities from using cryptocurrency exchange services. As a result, companies and organizations in Korea must keep their cryptocurrencies on their storage drives, such as USBs, which increases the risk of theft or loss.

In such a regulatory environment, organizations that own digital assets have advocated digital asset custody services expansion.

These organizations would prefer that the country’s banks keep their digital assets, as banks have historically been highly reliable custodians. Korea’s current laws also prohibit banks from entering the DACS market directly. That is why Korean banks are establishing DACS JVs with only a minority stake.

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