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BitGo Korea, in which Hana Financial Group has invested approximately 25%, has completed its virtual asset service provider (VASP) registration with the Korea Financial Intelligence Unit (FIU) and formally launched its custody business in South Korea. Sh Suhyup Bank has also acquired a stake in custody firm Infinibloc, and with existing shareholder iM Bank making an additional capital contribution, the two banks now each hold roughly 15%, becoming joint second-largest shareholders. Most major South Korean banks — including KB Kookmin Bank, Shinhan Bank, NH Nonghyup Bank, and Woori Bank — have secured equity positions in custody providers. The banking sector is positioning to capture custody demand ahead of expanded institutional participation, potential approval of spot bitcoin ETFs, and the possible issuance of won-denominated stablecoins. However, since current law makes it difficult for banks to operate custody services directly or through subsidiaries, they are entering the market indirectly through minority stakes of 15% or less.
Key Elements
BitGo Korea, a virtual asset custody firm in which Hana Financial Group has invested approximately 25%, has completed its virtual asset service provider (VASP) registration with the Korea Financial Intelligence Unit (FIU) under the South Korean Financial Services Commission and formally launched its domestic operations. Sh Suhyup Bank has also acquired a stake in custody firm Infinibloc, and with existing shareholder iM Bank making an additional capital contribution, the two banks have each secured approximately 15% ownership, becoming joint second-largest shareholders. Following commercial banks, regional banks and specialized banks are now joining the race to secure “crypto vaults.”
Custody is a service that stores and manages private keys — essentially the passwords required to move cryptocurrencies — on behalf of customers. Entrusting private keys is akin to handing over asset management authority. Given that it involves managing customer assets, custody is functionally aligned with the trust services banks have long provided, making it an attractive target for banks pursuing expansion into digital asset businesses.
According to financial industryd equity relationships with custody providers. KB Kookmin Bank co-founded Korea Digital Asset (KODA) with blockchain companies in 2020. Shinhan Bank and NH Nonghyup Bank have invested in Korea Digital Asset Custody (KDAC), while Woori Bank holds a stake in Bidex. Hana Financial Group has distributed its investment in BitGo Korea across its banking, securities, and financial IT affiliates
The banking sector’s focus on custody stems from the potential for rapid growth in custody demand if corporate and institutional investor participation in the market accelerates. If spot bitcoin exchange-traded funds (ETFs) are introduced in South Korea, specialized custodians will be needed to hold underlying assets on behalf of asset managers. Should won-denominated stablecoins be issued, custody infrastructure would likely be utilized in wallet management and payment and settlement processes.
Scalability is another key factor. Financial institutions can leverage the customers and assets under custody to expand into staking, over-the-counter (OTC) trading, collateralized lending, tokenized assets, and payments and remittances. This is why custody is often described as the gateway to digital asset finance, extending well beyond simple storage services.
Global financial institutions have already entered the market through various approaches. BNY Mellon provides cryptocurrency custody services directly through its banking entity. Citi plans to launch digital asset custody this year, beginning with bitcoin custody, while Fidelity operates its digital asset business through a separate subsidiary. Cryptocurrency firms such as Circle and Ripple have also received conditional approval to establish federal trust banks, moving toward becoming regulated financial institutions.
In contrast, South Korean banks face significant hurdles in operating custody services directly or holding custody companies as subsidiaries. Cryptocurrency storage and management is not included among the inherent or ancillary businesses permitted under South Korea’s Banking Act, nor is it listed among permissible subsidiary business categories. Under the Capital Markets Act, cryptocurrencies are not specified among the assets that trust companies may hold, making it difficult to handle them through existing trust operations. As a result, banks are entering the market indirectly by investing minority stakes of 15% or less — the legal limit — and building cooperative relationships with specialized providers.
A financial industrympetitors in the digital asset market.” Theeparate subsidiary or a custody arrangement with a specialized provider is more likely than direct operation by the bank itself, so they are securing minority stakes to establish a cooperation framework before the market fully opens.”
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Source: finance.biggo.com