South Korea’s Shinhan Bank starts the First Fiat-crypto account
The South Korean commercial banking giant Shinhan has become the first bank in the nation to offer crypto account services to a corporate client.
ZDNet Korea reported that on April 7, the bank created a corporate fiat KRW account exclusively for crypto-asset transactions to the crypto exchange Korbit.
Shinhan Korbit connection
Shinhan’s Korbit connections are continuing to deepen. The bank is reportedly on the verge of finalizing a deal to buy some 20% of the crypto trading platform, South Korea’s first and one of its biggest. The bank also provides customer fiat on/off ramps for Korbit in the form of real-name banking services.
The corporations that received the accounts include Korea Digital Asset Custody (KDAC) members. Shinhan Bank and Korbit are investors in the KDAC. According to experts, the bank’s move is to attract corporations wishing to invest in virtual assets and the custody market.
Under South Korean law, corporations were previously not allowed to make direct crypto-asset investments via banks and were forced to buy and sell assets using overseas subsidiaries. However, a legal change late last year allowed banks to begin offering such services.
The Shinhan move will essentially allow Korbit to make crypto purchases in KRW using its account without the need to deal with cross-border workarounds.
But the move will likely have more significance for companies outside the crypto sphere. Like Tesla in the United States, South Korean firms are thought to be keen to add crypto assets to their balance sheets. But without specialized banking services that facilitate KRW-crypto purchases, experts told the media outlet, they have been very reluctant to do so.
An unnamed industry insider said the move would likely “result in an increase in liquidity.”
The Korea Blockchain Industry Association was quoted as stating:
“Global enterprises are boosting growth by moving into and investing in cryptoasset markets. Examples of this include PayPal and Tesla. This is an international trend, and South Korean companies need to follow.”
Meanwhile, the presidential handover committee – the body that oversees the transfer of power between the outgoing President Moon Jae-in and the President-Elect Yoon Suk-yeol – has responded to media reports alleging that “two or three” crypto exchanges will be granted regulatory permission to reopen KRW pairings.
As previously reported, the vast majority of crypto exchanges in South Korea were forced to halt fiat pairings in September last year, with a new law forbidding all exchanges except those that offer real-name authenticated fiat on/off ramps with commercial banks. Banks had been reluctant to offer such services, as they have been told that doing so means they must absorb their partner exchanges’ money-laundering and security risks.
Shinhan is among those who will provide a crypto account
Until recently, only three banks – including Shinhan – provided such services. And they did so exclusively in the case of the “big four” exchanges (a group that includes Korbit). But one of the two dozen or so exchanges stuck in limbo since September – Gopax – has since sealed a banking deal with the regional bank Jeonbuk Bank.
And media outlets have claimed key progress has been made in the case of a number of other such exchanges that have been talking to banks for months in hope of brokering a deal.
Unnamed sources were quoted as stating that major banks such as KEB Hana, Kakao Bank, Woori, and Standard Chartered’s South Korean arm SC Jaeil, were speaking to exchanges with a few deals close to completion.
The presidential transition committee, however, declined to confirm or deny its own part in the matter. Many are hopeful that Yoon, who has promised to foster the crypto sector, will help facilitate the process for a number of smaller crypto exchanges.
But Newsis quoted Choi Ji-hyun, the deputy spokesperson of the committee, as telling reporters:
“We are still in internal talks regarding the specific details of the President-Elect’s cryptoasset-related manifesto pledges.”
Choi added that the committee had “not made any decision” on the question of seeking to increase the number of exchanges that offer fiat trading services.
The Korea Blockchain Industry Association welcomed the news about Shinhan Bank and Korbit, saying, “Global enterprises are accelerating their growth by entering and investing in virtual asset markets, examples of which include PayPal and Tesla, and this is a global trend South Korean companies need to follow.”