Anna Jiwon Park has been covering the politics at The Korea Times since the summer of 2024, when she joined the press pool for the Office of the President in Korea. Prior to that, she spent about five years reporting extensively on financial markets, regulatory authorities and the financial industry. She joined The Korea Times in 2019 after spending eight years as a broadcast journalist at Arirang TV, Korea’s leading global broadcaster, covering politics, defense and culture.
Tesla CEO Musk to facilitate crypto demand in Korea
SpaceX owner and Tesla CEO Elon Musk speaks during a conversation with legendary game designer Todd Howard at the E3 gaming convention in Los Angeles, June 13, 2019. / Reuters-Yonhap
By Anna J. Park
Financial giants invest in crypto custody market amid larger acceptance of bitcoin
By Anna J. Park
Since Tesla made an announcement in an SEC filing on Monday that the global electric vehicle (EV) maker not only bought $1.5 billion worth of bitcoin but also will accept the cryptocurrency as payment for its vehicle purchases, bitcoin's price jumped by more than 10 percent a few hours after the filing. Bitcoin continued to soar to its record-high level, at one point topping $47,000 on Tuesday.
With bitcoin solidifying its presence through acknowledgements by moguls like Elon Musk, more and more companies are expected to take a similar path as Tesla, having the crypto token be part of their diversified asset portfolios or using it in their business expansion models.
As more institutional or corporate entities attempt to purchase a massive amount of crypto assets, local financial firms ― probably one of the most traditional and conservative sectors in terms of corporate culture ― have been moving fast to gain a foothold in the cryptocurrency markets.
KB Bank was the first among local lenders that made an investment into a digital custody business that mainly deals with bitcoin purchases and deposits. KB Kookmin Bank and blockchain-focused crypto asset fund Hashed joined hands to establish Korea Digital Asset (KODA) late last year. KB Bank said it plans to expand its services beyond the current crypto deposit role.
Shinhan Bank invested in Korea Digital Asset Trust (KDAC), a cryptocurrency asset trust firm launched in 2020. KDAC and Shinhan said they will collaborate in various digital asset services, such as decentralized finance.
Market watchers say these moves came as local financial giants are under pressure to adopt digital assets as part of their service or risk losing ground in the next era of digital finance. As trading and settlements of bitcoin and other crypto tokens based on blockchain technology do not require a traditional financial network, traditional players felt the need to join the crypto market.
Such a threat is felt by global financial firms as well. As companies are adding bitcoins either to their portfolios or in their settlement services, such as MicroStrategy, PayPal, Square and Overstock. Goldman Sachs said it plans to enter the digital asset custody market soon. JPMorgan and Citi are also reportedly closely eyeing the crypto custody market.
BOK accelerates move to adopt digital currency
Meanwhile, central banks' move towards digital currencies are also gaining momentum. The Bank of Korea (BOK) recently published a research paper on the legal status of its central bank digital currency (CBDC), which states that the BOK's CBDC will have the same status as paper money, as the digital currency is a natural consequence of legal paper money's development process.
The central bank has been working on the CBDC initiative since last year, as it set up studies and research projects for the CBDC pilot program. More than 80 percent of most central banks are known to be researching digital currency initiatives.
A BOK official said, however, that the official use of the CBDC is still a distant prospect and no timeline has been set for its debut.
“Cash is used by the public less and less, but it still holds a significant utility to the public,” an official from the BOK said, adding that the bank is just preparing for the future where digital currencies become the main source of settlements.
The official added that one of the key reasons that the central bank is preparing to issue digital currency is to boost the stability of the legal currency.
“When the public no longer uses as much cash as they used to, their liquidity will mainly be dependent on commercial banks' deposits, which makes them largely exposed to commercial banks' risks. Thus central banks need to go towards the direction of CBDC in the end to provide stability for the legal currency and to compensate for the possibility of market failures,” the official said.