Shinhan, the second largest commercial bank in South Korea by market valuation and consumer base, has initiated the testing phase of its bitcoin vault and wallet services.
Why a Major South Korean Bank Decided to Launch a Bitcoin Vault and Wallet Platform
A representative of Shinhan Bank told Naver News, a media outlet operated by South Korea’s most widely used search engine, that the bank has come to a corporate decision to launch a bitcoin vault and wallet platform as a response to the recent hacking attacks of leading South Korean cryptocurrency exchanges including Bithumb.
In June, South Korea’s Bithumb, the world’s largest cryptocurrency exchange by trading volume, suffered a security breach that affected 30,000 users. As a consequence, the bank refunded $1 million in funds and provided an extra $1 million to the 30,000 users as a compensation for the hacking attack they had experienced.
In an official statement provided to Naver, a Shinhan representative said:
“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.”
Given that Shinhan serves millions of active users and tens of thousands of corporations in South Korea, the integration of a bitcoin vault and wallet platform into the existing infrastructure of the Shinhan banking system would immediately introduce bitcoin to the general consumers within the region. Such exposure of bitcoin to the mainstream within South Korea, a leading bitcoin market, would significantly increase in the rate of adoption of bitcoin in the country.
Shinhan to Become First Commercial Bank to Introduce Bitcoin Vault and Wallet Service
If Shinhan launches its bitcoin vault and wallet platform by mid-2018 as planned, the company will become the first regulated and large-scale commercial bank to provide bitcoin vault and wallet service.
At this stage, whether Shinhan will offer bitcoin brokerage and trading services to enable their existing clients and customers to purchase or sell bitcoin remains unclear. It is likely that Shinhan will partner with cryptocurrency exchanges within South Korea such as Bithumb, Coinone, and Korbit to provide liquidity to Shinhan’s client base.
Earlier this month, Choe Heung-sik, chief of the Financial Supervisory Service (FSS), stated that the South Korean government will not impose strict regulations on cryptocurrency exchanges in the foreseeable future.
“Though we are monitoring the practice of cryptocurrency trading, we don’t have plans right now to directly supervise exchanges. Supervision will come only after the legal recognition of digital tokens as a legitimate currency,” said Choe.
The integration and adoption of bitcoin by the country’s second largest bank would mean that bitcoin has already become a legitimate currency. As such, upon the integration of bitcoin by Shinhan, it is also likely that the South Korean government will regulate bitcoin, like Japan has done in March.