Why did KB (Kookmin Bank) start a virtual asset custody business? Is it advantageous for a bank to establish a joint venture with another company for virtual asset custody?
First of all, maybe you already know, the bank's virtual asset custody is a global trend. Recently, foreign financial institutions are adding virtual assets to their consignment portfolios. The U.S. allowed the Federal Bank's virtual asset custody service in July. Germany also allowed banks to custody virtual assets at the end of last year. Fidelity, a world-renowned asset management company, also established a subsidiary and started a virtual asset custody business from last year.
KB Bank also jumped in quickly to keep up with this global trend. Preparations started relatively early. Previously, KB Bank applied for a trademark called KBDAC (Digital Asset Custody) to the Intellectual Property Office in January of this year. From this point on, there were many predictions that KB Bank would be engaged in the virtual asset custody business. After that, KODA was established in earnest by signing a “business agreement for digital asset collaboration” with HatchLabs (www.rocketpunch.com), Hashed (www.hashed.com), and Cumberland Korea in August.
However, in order for a bank to conduct a virtual asset custody business in Korea, it will have to establish a joint venture like KB Bank. This is because virtual asset custodial companies are included in the 'Virtual Asset Service Provider (VASP)' according to the amendment to the Specific Financial Information Act (SFIA), which will take effect in March 2021.
According to the SFIA, a virtual asset service providers must meet the requirements such as ISMS (Information Protection Management System) certification and anti-money laundering (AML) solution, and report it to the Korea Financial Information Analysis Agency (KoFIU) before operating.
An official at KB Bank said, "Because the bank cannot directly acquire a license for a virtual asset business, should talk to a blockchain startup (related to a joint venture)." KB Bank CEO Moon said, “KODA will report to the KoFIU as a virtual asset service provider with related requirements such as ISMS (Information Security Management System)”.
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