NH Bank discusses digital asset custody issues
Digital asset custody services have risen as a new business area amid the financial digitization. On July 1, Nonghyup Bank, law firm Bae, Kim & Lee LCC and blockchain research center Hexlant held a seminar about the future of virtual assets being accepted as conventional systems of finance. Ryu Chang-bo, a team leader at NH Bank, made a presentation about banks’ preparation for digital asset custody services. Ryu said banks will face a major change due to digitization. Especially with the pass of a revision to the Act on Reporting and Using Specified Financial Transaction Information, virtual currency has been accepted by existing financiers, creating a new opportunity. “The revision on the act is expected to bring similar changes to the real-name account system,” Ryu said. “Through the revised act, we are planning to come up with services that can process under the real-name account system. The digital asset custody service is targeted toward institutional investors.” Nonghyup Bank said it has experience in operating financial services in connection with other banks’ infrastructure, security systems and exchanges. For example, it has issued a real-name account system for virtual currency in partnership exchanges. However, Nonghyup Bank, wasn’t so enthusiastic about issuing additional accounts under the real-name account system. “Issuing new accounts is not profitable enough to take risks with the exchange,” Ryu said. Nonghyup Bank said it wants to cooperate with the exchanges to come up with additional business models. “Banks cannot prevent cryptocurrency from flowing into accounts that cannot be verified by name,” Ryu said. “I believe that banks could be able to fundamentally prevent digital assets from flowing into wallets that cannot be verified. NH Bank would like to run a proof-of-concept (PoC) for such functions." When the central bank digital currency (CBDC) is issued, Nonghyup Bank said it is considering launching a related service. “I don’t think it is right for the Bank of Korea to issue CBDC and then make an app which can manage it,” Ryu said. “Custody should be provided to institutional investors first, and then once the CBDC is issued, they can start a business coming up with solutions to manage the digital currency.” https://www.blockmedia.co.kr/archives/145722 ※This article is published with the permission of Blockmedia.