South Korea’s largest commercial bank, known as Kookmin Bank (KB), will begin offering Bitcoin custody services through a new partnership with Hashed, a blockchain venture fund, and Cumberland Korea, a cryptocurrency exchange. The news of the custody offering was reported by Bitcoin.com on August 9th.
According to a blog post by Jin Kang, the legal compliance officer at Hashed, the cooperation between the three firms will involve “managing and storing digital assets, advocating for optimal regulatory developments, and transforming the traditional financial sector.”
Kookmin Bank believes that traditional asset ownership may eventually be stored and traded digitally
Kookmin originally filed a trademark application for ‘Kbdac’, a digital custody service with the Korean Intellectual Property Office, in January of this year.
Kookmin Bank reportedly believes that the digital assets industry will continuously evolve to include a wider range of digital assets: not only cryptocurrencies, but also security tokens that represent “other traditional assets such as real estate, artwork, and other reified rights that will be issued and traded on blockchain platforms.”
Therefore, while the partnership between Kookmin, Hashed, and Cumberland Korea may focus on cryptocurrency in the short term, the three have plans to eventually offer custody and management services for security tokens and other digital assets.
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“I welcome this opportunity to collaborate with KB Bank so that South Korea can take the lead in the emerging market of digital assets,” commented Simon Kim, chief executive of Hashed, regarding the formation of the partnership.
“Combining our insight in the blockchain industry and providing both technical and commercial consultations will inevitably open new doors to consumers as well as to the country in ushering the new era of digital transformation.”
Banks in the United States may also begin offering custody services
The news that Kookmin Bank will begin to offer digital assets custody services closely follows the news that US banks can begin officer digital assets custody services of their own.
Indeed, on July 22nd, the United States Office of the Comptroller of the Currency (OCC), an independent bureau of the United States Treasury, issued a public letter clarifying that national banks and federal savings associations are legally permitted to have custody of cryptocurrency assets.
An open letter from Brian Brooks, a former Coinbase executive who is the current head of the OCC, said that
“[…] the OCC concludes…that providing cryptocurrency custody services, including holding the unique cryptographic keys associated with cryptocurrency, is a modern form of these traditional bank activities.”
The letter also noted that banks could eventually provide services that amount to “more secure storage services compared to existing options,” and that consumers and investment advisors may have a desired to entrust regulated custodians with their assets, rather than an unregulated entity.