Prominent South Korean bank KB Kookmin has set its sights on becoming a crypto custody provider joining the growing trend of financial institutions moving into the cryptocurrency custodial arena.
The news comes at a time when the country’s government has issued new laws concerning virtual currencies with the local market still in decline following successive stringent regulatory measures.
Crypto custody is still one of the issues identified by experts as being a hindrance to more broad-based institutional adoption. In recent times, major financial establishments like Fidelity Investments have launched cryptocurrency custody platforms to join the expanding pool which already contains services created by virtual currency giants like Coinbase.
KB Kookmin Files Patent for Crypto Custody Platform
According to South Korean news outlet Digital Today, KB Kookmin — the country’s largest bank is close to launching a crypto custody platform. Reports indicate that the bank filed a trademark application for KB Digital Asset Custody (KBDAC) back in January 2020.
Details from the Korean Intellectual Property Office show that the bank’s trademark application characterizes KBDAC as a platform that offers trading and investment advisory services for cryptos like Bitcoin (BTC) and Ether (ETH). Typically, in South Korea, a trademark application signifies that a company is in advanced stages of developing the desired product or service.
KB Kookmin is yet to announce a launch date for its proposed crypto custody service. As a financial institution, the bank will require approval from South Korea’s Financial Supervisory Service (FSS) before launching the proposed KBDAC crypto custody platform.
KB Kookmin’s crypto custody plans have been in the works for some time, with the bank inking a business collaboration agreement with cryptocurrency security outfit Atomrigs Lab. Commenting on its plans for the proposed cryptocurrency custodial platform, a KB Kookmin insider told Digital Today:
“KBDAC is related to what KB Kookmin Bank decided to cooperate with Atomrigs Lab in June 2019.”
South Korea’s Stuttering Crypto Scene
Earlier in March, South Korea’s parliament introduced a new legislative amendment that would recognize the country’s crypto industry. Once passed, crypto exchanges and all other cryptocurrency businesses will have to comply with the same reporting standards as their counterparts in the mainstream financial arena.
As part of the new legislation, all crypto businesses in South Korea will have to comply with strict anti-money laundering (AML) laws. Some critics say the cost of compliance brought on by these regulatory measures might be beyond the capacity of small and medium crypto enterprises in the country.
South Korea’s once bubbling crypto scene has declined in recent years with strict regulations forcing many participants to move their businesses elsewhere. Even large crypto exchanges have been affected, with their revenues tumbling significantly.
Financial Institutions Keen on Offering Custodial Services for Crypto
Away from South Korea’s cryptocurrency decline, KB Kookmin’s reported foray into the crypto custody scene represents the latest indication of commercial banks and other financial establishments looking to offer custodial services for digital assets. Back in February 2020, 40 banks in German applied to financial regulators to licenses to act as cryptocurrency custodians.
In the U.S. Bank of America (BoA) filed a patent to offer cryptocurrency custody services back in mid-2018 amid a wave of fresh institutional enthusiasm for cryptos at the time. Other mainstream establishments like Fidelity Investments also have their digital asset custody platforms.
As previously reported by Blockonomi, crypto custody platform BitGo announced its European expansion in February 2020 with the establishment of offices in Germany and Switzerland. In late 2019, reports also emerged that Dutch banking giant ING was also building its own cryptocurrency custody technology.