New Delhi: According to news reports of Korea, around $2 Billion crypto-currencies are been held by the commercial banks of Korea. This is despite the fact that regulated financial institutions in South Korea only account for 8 per cent of their total assets under brokerage.
The news was published in a mainstream media outlet in South Korea, Yonhap. It read, “The amount of crypto-asset investment is not really big, compared with other equity markets, and local financial institutions’ exposure to possible risks of digital assets is insignificant. Against this backdrop, we expect crypto-assets to have a limited impact on the South Korean financial market.”
In April 2018, it was reported that South Korea’s biggest crypto exchange Bithumb, held more than $6 billion in user funds stored in cryptocurrencies. Although, this figure was from when the valuation of the crypto market reached $900 billion, and crypto-currencies such as Bitcoin achieved a new all-time high at over $20,000.
Due to its status as a publicly listed company in the South Korean stock market, Bithumb is required by local authorities to disclose their holdings and revenues to investors in the public market.
Hence, given the substantial decline in the valuation of major digital assets since December of 2017, the holdings of the country’s biggest crypto exchange are now likely in the $1 billion regions.
As of July, commercial banks in South Korea hold more in digital assets that the country’s biggest crypto exchange in Bithumb.
While their holdings of digital assets are substantially smaller than its holdings in traditional assets like bonds and stocks, the fact that commercial banks remain as the largest holders of crypto-currencies is significant, especially in the crypto-currency industry still at its infancy and growing at an exponential rate.
South Korean Banks Enthused Towards Crypto-currencies
Commercial banks in South Korea have generally been more enthusiastic towards crypto-currencies, digital assets and the blockchain technology than banks in other regions.
For instance, Shinhan, the second largest bank in South Korea has been developing bitcoin wallets for its clientele and a traditional finance industry. More to that, banks like Shinhan partnered with blockchain projects such as Ripple to commercialize and implement the blockchain across industries outside of finance.
Shinhan said in December 2017, “Shinhan is testing a virtual bitcoin vault platform wherein the private keys of bitcoin addresses and wallets are managed and issued by the bank. The bank intends to provide the vault service for free and charge a fee for withdrawals.”
Currently, it is difficult to conclude the motive of large-scale commercial banks in South Korea holding digital assets as long-term investments or because they are holding billions of dollars in crypto-currencies on behalf of exchanges.
The government of South Korea disclosed its intent to regulate crypto exchanges and blockchain startups in an industry that will be recognized by the Congress and overseen by a newly drafted regulatory framework and in the upcoming months, the crypto-currency sector of South Korea is expected to be acknowledged as a legitimate industry.
(The news was originally published in Yonhap – a News Agency of South Korea)
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