Financial Institutions Softening South Korea to Cryptocurrencies

South Korea is an emerging cryptocurrency user, with banks having at least $2 billion in cryptocurrency. This is a sizable amount that may even dwarf the cryptocurrency values held by South Korea's current largest domestic exchanges.

Regulated banks have at least 8 percent of their assets in cryptocurrencies. Banks in South Korea are becoming more interested in cryptocurrencies but not interested enough to keep their current assets at a volume that would hurt them should the volatility of cryptocurrency values negatively affect the financial institutions.

Alongside this accumulation of cryptocurrencies, a diversification of services that are targeted towards bank clients with interests in diversifying into cryptocurrencies can be expected from South Korea's banks.

It seems that it is not only South Korea's financial institutions that are becoming more interested in cryptocurrencies. The South Korean government seems to be relaxing its stance on the idea of cryptocurrency as well. Early in the year, the government made moves to “clamp down” on irrational cryptocurrency investment. The South Korean government also announced the inspection of cryptocurrency accounts for major banks.

Business Korea reports that South Korea's National Assembly recently made moves to re-legalize initial coin offerings (ICOs). ICOs were banned back in 2017 but the re-legalization of ICOs would allow domestic blockchain companies to operate within South Korea, rather than having to do the ICO in Singapore or Switzerland. Such current practices usually incur additional fees and are security holes for those dealing in cryptocurrency in South Korea.

While the relaxing of policies regarding cryptocurrency in South Korea has been a positive move for the government and South Korea's financial institutions, the recent spike in cryptocurrency thefts may influence how South Korea will continue to develop its cryptocurrency policies. Just recently, Bithumb, South Korea's second largest cryptocurrency exchange, was victim to a recent theft worth $32 million in digital currencies.