South Korea’s KEB Hana picks BitGo for crypto custody business

KEB Hana Bank, one of South Korea’s largest banks, is entering the digital asset custody business through a strategic partnership with BitGo, a wallet infrastructure provider and digital asset custodian.

This collaboration aims to establish digital asset custody services in South Korea, leveraging BitGo’s expertise in custody solutions and Hana Bank’s financial services and compliance knowledge.

Hana Bank is a South Korean financial conglomerate and commercial bank that operates a network of 111 branches and holds local banking assets of nearly $10 billion with equity totaling $490 million.

As part of their agreement, the two parties will establish a joint venture to offer digital asset custody services, addressing the growing demand for cryptocurrency-related services in South Korea.

In 2022, KEB Hana reportedly earned $2.4 billion (3.16 trillion Korean won) in profit. The bank had previously shown interest in the crypto and Web3 space by opening a branch in the metaverse platform The Sandbox in July 2022.

“By promoting digital asset custody business together with global partners, we expect to contribute to strengthening trust in the domestic digital asset market and consumer protection,” a Hana Bank executive said.

This private sector partnership aligns with South Korea’s tech-savvy population, which has been showing a strong interest in cryptocurrencies. A recent survey indicated that South Koreans rank among the highest in the world in terms of cryptocurrency awareness, with 63% of the population stating they understand digital assets.

Furthermore, this collaboration is consistent with South Korea’s efforts to regulate the cryptocurrency industry. Most recently, the country’s Financial Services Commission (FSC) has revealed new accounting supervision guidelines around digital assets, which will come into effect from January 2024.

These rules will require local companies that issue or hold cryptocurrencies to provide detailed disclosures related to crypto assets in their financial statements. There will be also mandated clarity on the timing and criteria for recognizing profits from the sale of virtual assets to address the previous discrepancy between companies and auditors about relevant accounting policies.

Under the regulations, companies will be obligated to include specific information in their disclosures in their balance sheet and financial reports. This includes information on the quantity and characteristics of their crypto tokens, their business models in the crypto business, and internal accounting policies governing the sale of cryptocurrencies and associated profits.

The draft version also outlines the scope of crypto assets that need to be reported. These reportable holdings include fungible assets that are based on distributed ledger technology or a similar technology, as well as assets that are issued using cryptography.

Additionally, the guidelines encompass security tokens, which are digitized securities falling under the purview of the Capital Markets Act.