South Korea’s largest bank to launch crypto custody platform

South Korea’s largest bank to launch crypto custody platform

Fresh on the heels of South Korea legalizing the possession and trading of cryptocurrencies, the country’s largest bank is planning to launch a digital custody service.

On March 5, South Korea’s National Assembly passed an amendment to the Act on Reporting and Use of Specific Financial Information bill which officially legalized the possession and trading of cryptocurrencies.

Just three weeks later, KB Kookmin, the country’s largest bank, filed a trademark application for KB Digital Asset Custody (KBDAC), its planned crypto custody platform.

Crypto propagation using KBDAC

Local news outlet Digital Today revealed that the application was filed on January 21, 2020, with the Korean Intellectual Property Office and outlines the bank’s plan to trademark KBDAC in over 20 crypto-related areas.

In addition to the trading, management, consultation, and investment of cryptocurrencies like Bitcoin and Ethereum, the trademark application also included consignment, settlement, liquidation, and transaction of digital assets with fiat currency, covering almost all businesses that involve digital assets.

According to the report, “KB Kookmin Bank has been particularly keen on the timing of the KBDAC launch.” Though it is not yet known when the crypto custody platform will launch, it is believed that the trademark application is a good indicator that the bank has already completed much of the platform’s development.

Atomrigs partnership gives a boost

In June of last year, KB Kookmin Bank partnered with Atomrigs Labs to explore the development of blockchain-based digital asset management technology and focus on digital asset market growth and new crypto-related businesses.

Atomrigs Labs develops blockchain-based asset protection technologies using next-generation cryptography. They are currently working on a technology that aims at safe virtual asset management.

By using a “multi-party secure computing” method that divides and stores the fragments of private keys, digital assets are protected from theft. One piece of a private key is not enough for hackers to steal the digital assets, however, only owners can recover a lost key fragment.

Lee Woo-yeol, chief information officer at KB Kookmin, considers blockchain to be a “big wave that will disrupt finance in the future,” and said that banks must take a proactive approach towards the technology.

Lack of management of crypto transactions

During the two-year discussion and deliberation of the crypto legislation, in December 2018, South Korea’s Financial Supervisory Service (FSS) warned two major domestic banks, Kookmin Bank and Nonghyup Bank, about their lack of management of crypto transactions.

The authority stated that they found “unreasonable elements related to virtual [currency] handling business.” They were also asked to look into their Anti-Money Laundering (AML) regulations, stating that banks are under the risk of money laundering and terrorist financing.

Banks were given three months to make amends and submit the measures taken to avoid this. They were inspected several times to ensure the guidelines were being adhered to.

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