South Korea's largest commercial bank Shinhan Bank to launch Bitcoin custody service

Shinhan Bank, the second largest commercial bank in South Korea in terms of market capitalization and user base, has begun testing its Bitcoin vault and wallet services. This is not the first time the bank has launched a Bitcoin-related service. In December last year, Shinhan Bank opened a Bitcoin remittance service between South Korea and China.

Reasons for launching Bitcoin custody service

A Shinhan Bank representative said in an interview that the bank decided to launch a Bitcoin vault and wallet platform in response to the recent attacks on major South Korean cryptocurrency exchanges such as Bithumb.

In June this year, Bithumb, the world's largest exchange by trading volume, suffered a security breach that affected 30,000 users. As a result, the exchange refunded $1 million in funds and paid another $1 million as compensation to the 30,000 users affected by the attack.

Shinhan Bank representative mentioned:

Shinhan Bank is testing a virtual bitcoin vault platform to manage and issue private keys to bitcoin addresses and wallets. The bank plans to provide free custody services and only charge a portion of the withdrawal fee.

Shinhan Bank has set up a test server to demonstrate the operation mode of this service. Later, they will officially launch this service, and customers can view data and deposit information through the mobile app. Considering that the personal information of more than 30,000 Bithumb users was leaked in June this year, Shinhan Bank’s deposit service must have a market.

In addition, Shinhan Bank serves millions of active users and tens of thousands of businesses in the country. Once the Bitcoin vault and wallet platform are integrated into the existing banking system architecture, more ordinary consumers will know about Bitcoin. The exposure of Bitcoin in this major trading market will greatly increase the popularity of this digital currency in South Korea.

First bank to offer Bitcoin custody services

Once Shinhan Bank launches its bitcoin custody platform as planned in mid-2018, it will become the first large commercial bank to offer such services under regulation. Cryptocurrency wallet and exchange startup Coinbase also announced this month that it has launched a new storage service, Coinbase Custody, for institutional investors.

At this stage, it is still unknown whether Shinhan Bank will help customers realize the buying and selling functions of Bitcoin by providing Bitcoin brokerage and trading services. However, the bank seems to be interested in cooperating with Korean cryptocurrency exchanges such as Bithumb, Coinone and Korbit to improve the liquidity of the bank's customer base.

Earlier this month, Choe Heung-sik, head of South Korea’s Financial Supervisory Service (FSS), said the South Korean government will not set strict regulatory rules for cryptocurrency exchanges in the future.

Although we are monitoring cryptocurrency trading, we currently have no plans to directly regulate exchanges. We will only regulate once the legal status of digital tokens is recognized.

The country’s second-largest bank has already begun to integrate and accept Bitcoin, which means that Bitcoin has become a legal currency in South Korea. Therefore, once Shinhan Bank officially integrates Bitcoin, the South Korean government is likely to follow Japan’s example and begin regulating Bitcoin.