Korean Banks are Holding Nearly $2 Billion in Crypto Like Bitcoin and Ethereum

Yonhap, a mainstream media outlet in South Korea, reported that commercial banks in the country are holding nearly $2 billion USD worth of cryptocurrencies.

Although the digital asset holdings of regulated financial institutions in South Korea only account for 8% of their total assets under brokerage, local publications reported the fact that digital assets, as an emerging asset class, already accounts for a portion of the holdings of commercial banks is significant.

In April 2018, it was reported that South Korea's biggest crypto exchange Bithumb, held more than $6 billion in user funds stored in cryptocurrencies.

Given the substantial decline in the valuation of major digital assets since December of 2017, the holdings of the country's biggest crypto exchange are now likely in the $1 billion region.

As of July, commercial banks in South Korea hold more in digital assets that the country's biggest crypto exchange in Bithumb.

While their holdings of digital assets are substantially smaller than its holdings in traditional assets like bonds and stocks, the fact that commercial banks remain as the largest holders of cryptocurrencies is significant, especially in the cryptocurrency industry still at its infancy and growing at an exponential rate.

Commercial banks in South Korea have generally been more enthusiastic towards cryptocurrencies, digital assets and the blockchain technology than banks in other regions.

"Shinhan is testing a virtual bitcoin vault platform wherein the private keys of bitcoin addresses and wallets are managed and issued by the bank. The bank intends to provide the vault service for free and charge a fee for withdrawals."

Currently, it is difficult to conclude the motive of large-scale commercial banks in South Korea holding digital assets as long-term investments or because they are holding billions of dollars in cryptocurrencies on behalf of exchanges.

The government of South Korea disclosed its intent to regulate crypto exchanges and blockchain startups in an industry that will be recognized by the congress and overseen by a newly drafted regulatory framework and in the upcoming months, the cryptocurrency sector of South Korea is expected to be acknowledged as a legitimate industry.