Sunday, January 29, 2023

Second Largest Bank in South Korea to Create Digital Asset Wallet

Second Largest Bank in South Korea to Create Digital Asset Wallet

In what looks to be another positive sign for cryptocurrency adaption in Asia, Korea’s Shinhan Bank announced it is building a cryptocurrency wallet for customers to store digital assets. It will also create a mobile app so wallet users can deposit and withdraw digital currency straight from their phones.

Also read: Xiaomi CEO Lei Jun, China’s Steve Jobs, Linked to Bitcoin Mining

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Bank’s Response to Bithumb’s Shortcomings

As cryptocurrencies in places like South Korea has exploded in popularity the last few years, many large players are starting to take notice and announce their own plans for the digital currency revolution.

Shinhan Bank South KoreaOne of those big players is Shinhan Bank, currently the second largest bank based on assets under management in South Korea. The bank announced this past week it would provide customers with a service to store and use digital currency under Shinhan’s core bank offerings.

Many believe this is a response to Korean cryptocurrency exchange Bithumb — whose struggles with cybersecurity as well as record safekeeping have become routine news in the industry.

Bithumb, the largest bitcoin and ether exchange in South Korea by volume, has been the victim of multiple cyber-attacks resulting in the loss of billions* of won (KRW) from customers’ accounts — as well as its own lack of adequate infrastructure when servers crashed early in November.

These issues have led to reports of potentially costly lawsuits, due to customers’ inability to make transactions in those times when services were unavailable.

(note: 1 million KRW = $922 USD)

Korea’s Banks Expanding Digital Offerings

Per Shinhan Bank, the new digital wallet will be a more secure option for South Koreans and international bank customers, as it will combine the strong security of the bank with the advantages of digital currency.

A bank official gave more clarity on what Shinhan’s goals were with its newest digital offering, as well as what customers should anticipate from a cost perspective:

“It is a service that keeps the blockchain key through the virtual safe provided by the bank … In regards to costs, we are looking for ways to provide a free service when depositing and charge a fee when withdrawing”.

Not willing to face the challenges that come with blockchain development alone, Shinhan has been working with a Korean fintech startup called Streami. The firm has specialized in blockchain-backed services since last year, and this announcement looks to be the first of many blockchain integrations that Shinhan is looking to accomplish.

As many banks continue to work on their own blockchain based services and infrastructure, we expect to see more announcements challenging the current offerings provided by exchanges. These providers, such as Bithumb and Bittrex, have struggled with scaling and fiat currency services, as well as keeping up with increasing customer demands.

Do you think investors are more likely to use a digital wallet provided by a bank, or a third party who has more experience providing digital currency solutions?

Images via Shinhan Bank, Business Korea

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