According to a local media report in South Korea, KB Kookmin, one of the largest banks in South Korea, plans to offer custody services for Ethereum and Bitcoin. The report states that the bank has already filed a trademark for its custody platform named KB Digital Assets Custody (KBDAC).
Expected Launch Date
The filing with the Korean Intellectual Property Office was filed on January 31. It would indicate that the bank would probably launch their custody solution for crypto in the next few months. However, the bank has not given a timeline for the launch of the platform.
The move will likely trigger the launch of similar custody solutions by other major South Korean banks. According to the trademark office, the bank filed for the use of the KBDAC trademark in investment, advisory, and the trade of digital currencies. The solution emanated from its collaboration with Atomrigs Lab, a partnership that started in June 2019.
KB Kookmin signed a business agreement with Atomrigs Lab on June 11, 201 for the development of a blockchain-powered platform for digital asset management. Through the agreement, the two companies would research digital asset custody solutions and the use of smart contracts.
Atomrigs Lab is a company that specializes in the development of blockchain-based solutions. It specifically works on the development of multi-party secure computing, which entails splitting up private keys into fragments. Consequently, hackers would have a hard time trying to find all the fragments of the private key, which are required to steal crypto assets.
According to the report, the crypto custody solution will be targeted at over 20 industries. Besides advisory services, consultancy, crypto management, and investment in crypto assets, it will handle virtual asset settlement, liquidation, OTC transactions, trust, transactions between crypto and fiat currencies, and much more. Almost all businesses that deal with crypto assets will be able to utilize the platform. In the future, the bank may form a crypto asset management subsidiary.
The bank will still need to obtain the approval of the Financial Supervisory Service and Financial Services Commission before it can launch the new financial product. As virtual asset management is still new in the Korean banking industry, it will be interesting to see how the regulator responds to this new product with time.
In terms of regulation, the national assembly passed the ‘Amendment to the Act on Reporting and Utilization of Certain Financial Transaction Information’ on March 5. The new law is targeted at the virtual assets industry. It will come into force on March 2021. In the new law, virtual assets are given legal recognition, which will allow banks to offer services related to the digital assets industry.
Impact on the Korean Financial Industry
Once the KBDAC platform is launched, it is expected to have a major impact on Korea’s financial sector as well as the blockchain industry in the country. KB Kookmin is one of the biggest commercial banks in the country. Its decision to launch services related to the digital assets could prove quite disruptive to the nation’s financial services industry. Firms in the credit card industry, insurance, firms, and securities firms, could all be impacted by this move.
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